H.R. – Human Resource Questions for Small & Medium Sized businesses in regards to on going operations and Exit Strategy Planning

Tami Wiersma, PHR, the President at QCHR, Inc. based in Brea, California is kind enough to answer common questions that business owners have when it comes to H.R. issues with operating their business.  QCHR, Inc. is a full service Human Resources Consulting firm in Brea, CA.

Q: The employee handbook has not been updated in a while, how often should it be updated?

A current employee handbook is the foundation of communication within a company and should be reviewed and revised regularly. Employment regulations are continuously legislated (usually effective annually on January first, but also throughout the year) and your company handbook must reflect all those changes to remain compliant. For example, as you bring more people on staff, the requirements for leaves of absences also increase (Crime Victims, School Leaves, etc.). Changes in 2014 further defined and added criteria to many leave policies relating to employee’s family members.

As your company grows and evolves, the benefits offered or the published policies may also need to grow. For example, a handbook written a decade ago would not address important items such as social media or a texting while driving policy, but these are relevant topics in today’s workplace. It is best to have your handbook reviewed annually (January or February is the best time of the year!) by a professional. Once a change is made to the book, it is imperative the changes are communicated to the staff. Best HR Practices state that each employee should be provided with an updated copy of the book, which should supersede any other prior versions, and that each employee sign an acknowledgement of receipt of the newest handbook.

Q: How can a business owner implement new rules & regulations as smooth as possible without causing disruption to my operation.

“Change” of any kind will be disruptive. Only you know your staff well enough to anticipate the amount of disruption that change will bring to your company. For a small business who is developing policies to change a pattern of problem employee behavior, we find success with rolling out a new HR Function all at once (after all the newly developed HR function pieces are in place), in a group setting so no one feels singled out with the sudden establishment of rules.

The best timing is often the beginning of a fiscal or calendar year, or the beginning of a quarter or month. Know your industry… March is not the best time to roll out rules at a tax accountant’s office, July is terrible for an HVAC company, and December is bad for retail. Consider January or May for the CPA’s office, early fall or spring for the HVAC group, and between January and early spring for a retail or hospitality establishment. Another logical timeframe to ramp up the HR function where none existed before would be during a growth spurt when adding new staff members or after “cleaning house” with a troublemaker.

Often the initial policy introduction will result in questions or complaints. Commonly: Why do I need to sign this at-will agreement when I already work here? What happens if I get sick and exceed my paid time off allowance? Why do I need to start filling out a timesheet? When policies are explained, some staff members may be annoyed or upset, but many will have had these rules established at prior jobs and will be happy to have consistency once the HR Function is established.

Q: How does being in full compliance of new rules & regulations affect the sales price of a business?

Companies who want to sell their business should consider a smoothly running and compliant HR Function as a required part of due diligence. A clean HR Function adds value to a business sale, much like an upgraded house adds value to a family looking to buy a move-in ready home. No new business owner wants to inherit a problem issue or lawsuit waiting to happen. A company with a complete succession plan will have HR on their checklist: Are there any potential employee lawsuits or open investigations? Are there any open workers’ compensation claims? Are there any wage and hour violations? Which key employees will the new owner want to retain and what is the plan to ensure the employees want to stick around? Is there a problem employee that will not be invited to join the new owners? Is there an established safety plan in place? Is there an Employee Handbook in place? What do the HR forms and personnel files look like? Have a professional assist with a Due Diligence checklist to ensure everything is “flipped” and the new owners will have one less stressor to be concerned about.

Q: Do companies with fewer than 50 employees really need an HR department?

They do not need a fully staffed HR Department, per se; but they do need a solid HR Function with a professional overseeing the Function and handling the items outside of the day-to-day HR activities! Even with a handful of employees, companies must follow employment law regulations and ensure compliance; communication is key, and policies and procedures must in place to avoid confusion and chaos. Many laws protecting employees must be extended to “just 1 employee” and “I didn’t know” is not a defensible employer excuse!

Typically the ratio is 1 full time on site HR professional per 100 staff members, give or take based on the culture and industry. Many companies under 50 employees have someone on staff who wears multiple hats, with HR being one of side jobs they take on due to their position: often the Office Manager, Accounting Manager, Controller, or the President. These staff members are generally trusted individuals with discretionary decision making authority. Unfortunately, many are not fully informed on current HR regulations or make decisions based on common sense (which, in HR, isn’t always the best choice!). We recommend smaller companies have a professional resource available to them, such as an Employment Law attorney or dedicated HR Consultant, for HR issues out of the ordinary.

About the H.R. expert:

Tami Wiersma, PHR, President at QCHR, Inc., which is a full service Human Resources Consulting firm in Brea, CA. Tami’s specialty is HR compliance and her favorite assignments include creating and establishing an HR Function for smaller business and coaching business owners on the entire employee lifecycle. Check out the QCHR, Inc. website for more information, and call her company 714-582-1329.  Tami and her consultants specialize in hospitality, medical offices, professional services, trade services, and manufacturing, and provide both retained and as-needed/project based HR support, training, safety, HR risk assessments and audits, recruiting, policies, employee relations, and more.

We at Just Elementary, Inc., thank Tami for sharing her wisdom in this post.  For assistance with Exit Strategy Planning and Business Valuation, contact Just Elementary, Inc’s. client care manager, Sonia Chhabra, at  (888) 926-9193 or email cs@justelementary.com.