2009 - The Year of Thinking Small (and Smart)

What a year (and what a year to be over!). Thinking small in 2009 was in vogue, and probably will be for the forseeable future in 2010 and beyond, as organizations are challenged to do more with less. Fear of the unknown kept many organizations from making significant changes in 2009, even if they blatantly saved them money or created some efficiencies. That being said, some HR outsourcers had their best years ever. Some struggled to keep the doors open. Some kept trying to re-invent themselves into something that the market wants at this point. That will continue on as HR outsourcers search for the right and perfect place in the market.

So, in the spirit of thinking small (and smart) for 2010...

If you want to put off that "full blown" HR outsourcing initiative another year, some say you'll be another year behind your competitors. That being said, how about just outsourcing a small piece of HR, to try it on for size this year? Payroll's easy, so is recruiting. How about a little HR consulting? There's very little downside, and it's easy to extract yourself if it's not a fit.

If you're like I am, you believe something in this economy has to give - Soon! When that happens, and business picks up, will you have all of the time and energy you'll need for critical, revenue-generating tasks, and made plans with an outsourcer in advance to handle the "administrivia"? Or will you be playing catch up?

Tough Times, Tough Employers?

Found a great article in the Nashville Business Journal today about how these strange economic times we're in, along with thousands of layoffs, may cause yet another unwanted outcome for the small-medium sized business - employee litigation and lawsuits. In this time of uncertainty, fairness in employment practices and compliance is sure to be put under the microscope, as many employees try and find creative, and legal, ways of getting back at their employers for everything from wrongful termination to dealing with overtime issues. Dealing with these issues sucks up valuable time that executives and business owners really need to keep their businesses operational and moving forward. When's the last time your business had an HR Compliance checkup? Not having one could be very costly. Don't wait until it's too late.

Here's the link (you may need to copy & paste the whole thing into your browser
http://www.bizjournals.com/triangle/othercities/
nashville/stories/2008/11/24/focus5.html?b=1227502800^1737596

Working With Numbers in HR

In speaking with business owners and executives on a regular basis, I often ask if they have an idea of what potential HR liabilities exist in their businesses, and what they cost. Very few have strong answers. Some give the question a bit of thought and say basically "I guess you're right, a lawsuit could be expensive". Others claim not to think much about it. Some are scared to death because they don't know if they're doing something wrong inadvertently, putting them into a potentially costly non-compliance situation. They don't know what they don't know.

Given the increasing number of federal & state labor laws out there today, a company with as few as one employee could be at risk for non-compliance (I'll provide the complete list in the next entry).

For now, sink your teeth (or your brain) into these numbers:

• Federal regulation compliance costs small businesses $7,647 annually per employee.
• The average direct and indirect cost of losing an employee can be up to 125% of that employee’s annual salary.
• During 2006, the EEOC received a total of 75,768 discrimination charges against private sector employers, with over 53%of the allegations based on either race(20%), sex (17%) or retaliation (16.5%).
• The average sexual harassment settlement is $250-$500k (and you still pay something win or lose)
• Workforce Management reports an expected shortfall of 10-million workers bythe year 2010.
• The number of U.S. laws and regulations regarding employment policies andpractices has grown by more than 60%since 1998.

Are you sure you want to leave the employer/employee relationship to non-experts?

5 Questions

Funny how life & work can get in the way of blogging, exercise, sleep etc., etc. Anyhow...time to get back in the saddle, as they say... I think a good place to start is to look back at fundamental parts of HR in a business and really focus on what can be better handled elsewhere, in an outsourcing relationship, so you and your team can get back to your core business to maximize profits & revenue. From what I've seen - especially in the small-medium segment (which I call 25-5000 employee organizations), there 5 main business drivers to consider and questions to answer for your growing organization...in this economy, or in any other:

1. Are you confident your business is protected from the risk of non-compliance? The number of U.S. laws & regulations regarding employment policies and practices has grown by more than 60% since 1998 (just 10 years - can you believe it?).
2. Is your organization faced with a decision to invest in new technology to support your HR, payroll and benefits needs?
3. Do you face challenges in recruiting and retaining top talent? The average direct and indirect cost of losing an employee can be up to 125% of that employee's annual salary.
4. Are your employee resources strained by the burdens of administrative tasks? This varies wildly by organization. The key question to ask you and your team: is it in the best interest of the business for me to be doing this?
5. Has the rising cost of health care diminished your ability to provide rich benefit packages to your employees? HR outsourcing companies are experts at handling these areas, though a little shopping for a PEO, ASO, consultant, or contract employee would be wise. Bottom line: if you have good answers/responses to these 5 questions, and are handling them in the most cost effective way, congrats to you - you're on the leading edge. For the other 98% of us, seek professional help (in the way of competent HR outsourcing companies and professionals.

Next Entry: HR Statistics (don't yawn - they may actually be good for you!).

How's That Working For You?

If you, a business colleague, or friend, ever want to do a quick evaluation of where you are in a particular area of your business or in life, ask this question: "so, how's that working for you/me"? Sometimes we get so caught up in the day to day chaos called our lives, that we don't have time to stop and evaluate some of the critical decisions and choices we've made. Or we've just forgotten to do it, and often wonder why we're not getting the results we want. Or, have somehow convinced ourselves that we're "all set", and no changes are necessary - in spite of a constantly changing world. Happens all the time.

In our world of Human Resources, like most fields, change happens regularly, and we must evaluate how effective our programs, strategy, compliance with the law and benefits are working.

One of the best ways for a small-medium sized organization to get a snapshot of how well HR is performing, is to have a certified HR professional conduct an HR Assessment or an HR audit. Much of what is evaluated deals with legal compliance and the "alphabet soup" of HR laws that exist - with more coming regularly. The rest has to do with best practices, and areas you may want to shore up, that will help with the attraction and retention of top talent, risk mitigation, process imporovement and lowering the overall cost of doing business.

Take the time to have this done. The impact on your organization'sprofitability, productivity, time savings & liability will be very positive. You'll know where you're strong, and where opportunities exist for improvement. So, the next time a business peer, friend, co-worker or consultant asks "so how's that working for you?" - you'll know for sure. And you'll have a game plan for future success.

So, Just What is "Strategic HR"?

Depends on who you talk to, I think. While most everyone in business can name a few "tactical/administrative" HR tasks that don't make a company any money (benefits administration, payroll processing, worker's comp claims, COBRA administration, and other yawn-inducers), there is little consensus on what "strategic HR' means. Which is a little strange, since "strategy" is often what determines how a company differentiates itself in the marketplace and maximizes profits from that.

Making the bridge from HR Strategy to real business results can be fuzzy for business owners & executives because they're dealing with a big variable that is not always predictable: people. Fear not. I'm here to help clarify the issue, by excerpting the following article by Rob Blunt of PEO Consulting Group, Inc. (peoconsulting.com)...January 22, 2007 newsletter.

"Business definition of Strategic: Nearly every business function uses the term strategic to describe its plans, programs and initiatives...Examples of strategic business objectives include improving customer service, reducing costs, increasing market share or employee productivity.

HR definition of Strategic: A strategic approach means taking a "longer" term, "big picture" approach to HR. Being strategic means operating HR programs or initiatives with the goal of making a direct contribution toward meeting major corporate long- term objectives. Rather than focusing on internal HR “issues”, a strategic focus means addressing and solving “business” problems through the effective use of people management programs.

The primary goal of strategic HR is to increase employee productivity, corporate revenue, and profitability."

My two cents. Rob's right. Think about it. HR Tasks like talent acquistion & retention are strategic . Happy cows produce more (and better) milk, I've heard. That would also include things like your benefits strategy (offering high-quality benefits usually equals attracting better talent), performance management strategy (maximizing employee productivity), and HR compliance training strategy (not the sexiest strategy, but one that could signficiantly impact profitability....we hear of companies more frequently getting hit with employee lawsuit for wrongful termination - and the employees win because the company enforced it's HR policies inconsistently - or worse - had none at all.) These are just three of many HR strategies that a HR consulting professional or outsourcer can suggest to benefit your organization.

Unless an HR program or initiative, including outsourcing, can show how it would positively impact profitability, employee productivity and revenue, then your company could be spinning it's wheels. Not the best way to sustained growth, is it?

New Year, Old Issues

As 2007 ramps up, so are many strategic plans for executives & business owners at small-medium sized companies. These strategic plans are often visionary, designed to further the missions of their organizations. These plans also address the many issues that impact profitability, employee productivity, talent acquisition & business efficiencies.

In our world of HR, the questions often asked during strategic planning are:

• How do we find talent to increase the financial stability of the company?
• As an executive, am I, or a key person in the company, doing administrative work on a regular basis? Is there a better, more productive way?
• How does our company handle significant increases in benefits costs every year? How do we cost contain one of our largest expenses?
• How compliant are we with labor laws? We sometimes think about being sued by employees? What's our game plan in case that happens?
  

Those issues are real, and don't go away. They can be addressed, though, by engaging the expertise of consultants or HR outsourcing firms. These professionals can be retained in a multitude of areas to determine compliance, provide employee benefits, training, worker's compensation, safety & payroll services. They can even help with the liability your company has as an employer.

It's not too late to add this critical piece to your 2007 Strategic Plan.

Here's To Your Success in 2007!