tag:blogger.com,1999:blog-4978186744126504242024-03-07T23:26:06.334-08:00Startup HRHelpful tips for startup companies to manage their employment risks, attract top talent and keep their burn rates in check.HR Haighttp://www.blogger.com/profile/09591831482444980639noreply@blogger.comBlogger20125tag:blogger.com,1999:blog-497818674412650424.post-47355337293784316532013-11-25T14:13:00.000-08:002013-11-25T14:13:05.616-08:00New Rules for HR CertificationsIf you have a PHR, SPHR or similar designation through HRCI, then you know what it's like having to stay on top of your continuing education credits so that you can renew every three years. But if you're like me, remembering a deadling three years from now is a recipe for disaster. So "Happy Birthday!", HRCI is changing the renewal of your certification to coincide with your birth month. That means, you just need to remember to have your credits in order every three birthdays. This change will occur next year in February, so make sure you read up on the specifics in this <a href="http://global.hrci.org/docs/default-source/web-files/email-on-birthday-rule.pdf?sfvrsn=2" target="_blank">letter from HRCI</a>.HR Haighttp://www.blogger.com/profile/09591831482444980639noreply@blogger.com0tag:blogger.com,1999:blog-497818674412650424.post-12378690931910551022013-10-14T12:44:00.004-07:002013-10-14T12:47:58.632-07:00Affordable HR HelpGreat news for business owners who need help, but don't have the budget for a comprehensive HR solution yet! CPEhr, a leading California human resources firm and PEO, has unveiled it's $99 one-on-one phone support to help businesses get the answers they need without breaking the bank. All you do is click the "Get HR Help" button, pay the $99 fee and an HR specialist will call you that day. By comparison, even the least expensive Cal Chamber (HR California) option is $450/year and doesn't include any phone support.<br />
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The drawback to this is that you only get help with one issue, like determining whether a person should be exempt or non-exempt, an employee or 1099 contractor, etc. If you need things like handbooks, written policies and the like, you would need a more complete solution in place. In that case, the Cal Chamber mid-level option at $600/year might be best from a budget standpoint. That will get you access to templates and their help line. Of course, it's still a limited platform because the templates are really just a starting point, so you will have some work to do in order to build them up into final versions.<br />
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Here are the links to both and if you need help deciding or want to hear more about your options, just shoot me an <a href="mailto:hrhaig@gmail.com" target="_blank">email</a> and I'll be happy to help!<br />
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<a href="http://www.cpehr.com/live-support-hr-helpdesk" target="_blank"><span style="color: blue;">CPEhr HR Help</span></a><br />
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<a href="http://www.calchamber.com/hr-california/Pages/membership_overview.aspx" target="_blank"><span style="color: blue;">HR California</span></a>HR Haighttp://www.blogger.com/profile/09591831482444980639noreply@blogger.com0tag:blogger.com,1999:blog-497818674412650424.post-7340831247441127232012-09-12T12:03:00.000-07:002012-09-12T12:03:12.588-07:00Facing Rejection With ClassGiven the exceedingly tough job market over the past few years, I thought it would be helpful to give a few tips to job seekers on how to handle being turned down for a job. As a matter of law, an employer does not have to contact a rejected candidate to inform them that they were not selected. If you haven't heard back after following up with the prospective employer or recruiter, they have probably elected to move in another direction. However, losing out on a job could be turned into a future opportunity.<br />
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<i>* Remember that recruiters or staffing agencies work with multiple accounts and may have other openings that would fit you better than the one you didn't get, so keeping good relations with them is imperative.</i><br />
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If you do happen to receive a call about the bad news, here are a few things that you might try to set up a future opportunity:<br />
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1. Always let them know that you appreciate their time and consideration, especially in that they've performed the courtesy of contacting you to tell you that you weren't selected.<br />
2. Ask for feedback! Let them know you are always looking to improve yourself and their input can help you be a better candidate in the future.
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3. Express a desire to keep in touch regarding future opportunities. Adding them to your LinkedIn network might be a good idea.HR Haighttp://www.blogger.com/profile/09591831482444980639noreply@blogger.com0tag:blogger.com,1999:blog-497818674412650424.post-35556577467768596192012-04-03T10:56:00.000-07:002012-04-03T10:56:24.532-07:00Vendor Discrimination?I recently had an opportunity to work on a case where a company received a letter from an independent contractor that had been bidding to provide its services who claimed to have been discriminated against because he was not selected in the end. The employer was naturally concerned about the exposure to liability and sought assistance in replying to the allegations. As a rule of thumb, employment law only governs conduct between employers and employees. In this case, a vendor of services or independent contractor is, by nature, not an employee and is not covered by Title VII. However, this doesn't mean that you are immune from liability from every independent contractor on your roster. If you recall in my article about the <a href="http://startuphr.blogspot.com/2011/12/hr-tip-of-week_08.html" target="_blank"><span style="color: blue;">misclassification of 1099 workers</span></a>, the determination of who is and is not an employee will be based on their actual job duties with a company. Not only is it always important to carefully review the circumstances surrounding each allegation of labor law violation, but to proactively review the classification of your employees and independent contractors to make sure they are appropriate so there aren't any surprises if you should ever find yourself the recipient of a similar letter.HR Haighttp://www.blogger.com/profile/09591831482444980639noreply@blogger.com0tag:blogger.com,1999:blog-497818674412650424.post-73291196071378735012012-03-13T13:35:00.001-07:002012-03-13T13:35:14.931-07:00How much does health insurance cost?Now that you've organized your business, this may be a good opportunity to flex that employer muscle to set up some benefits for yourself and your employees. This may even be an indispensable tool for helping you attract and retain quality employees, especially as healthcare has become an increasingly hot button topic for many.<br />
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Interestingly, the first question employers ask tends to be the least relevant. How much does it cost? Well, that depends on what you're looking to get and what kind of group your company is. Much like buying auto insurance, which is determined based on the type of vehicle, driver risk and policy provisions (deductibles, maximums, etc.), the cost of benefits are going to depend on multiple factors. Ultimately, there's no such thing as employee benefits that are "on sale" or discounted to create more value. Because the premise of insurance is the protection against risk, the results for premiums are very tightly controlled according to well defined mathematical formulas. As a result, you'll pretty much get what you pay for, so it's better to ask a different question and decide whether its in your budget.<br />
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The question everyone should actually start with is, "What kind of employee benefit platform is right for me?" This focuses the conversation on the needs of your business and employees rather than just cost. The answer will depend on a variety of factors:<br />
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<li>Group Size - There are essentially two markets, small group (2-50 employees) and large group (50+ employees). Small group policies have age banded rates, so the premiums will not only vary based on the plan features, but also the age and location of each employee. This makes it more difficult to budget for growth in your company since your costs can't be scaled predictably. Large group policies have composite rates that don't change based on the demographics of the employee. If you're currently under 50 employees, but would like to have access to the large group rate structure, consider joining a multiple employer plan through a PEO or fix your contributions to a specific dollar amount and leave it to the employee to absorb the variance due to their demographics.</li>
<li>Industry Standard - A well trained HR professional should evaluate how common health insurance benefits are for each position in your company based on a compensation analysis using data from similar companies. You may not be able to avoid paying for health insurance if the new Systems Engineer you're looking to hire is offered these benefits everywhere else. This ought to be considered part of the overall compensation and budgeted for accordingly. Remember that benefits are a way to make your offers more competitive and attractive to potential candidates!</li>
<li>Employee Demographics - As insurance companies have developed more focused programs, like HealthNet's Salud, it's becoming increasingly more relevant to make sure that the plan you're considering and it's network is appropriate for your employees. After all, it does you no good to offer a plan that doesn't have any coverage in the region your employees reside, even though it might be inexpensive.</li>
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In the end, your consultant should prepare a short list of options, focusing on high fit solutions and discuss a multi-year program of development for your benefits platform. Only then can you make an informed decision about whether your organization is ready to make the commitment to providing benefits!</div>HR Haighttp://www.blogger.com/profile/09591831482444980639noreply@blogger.com0tag:blogger.com,1999:blog-497818674412650424.post-72739831916997504352012-02-06T12:11:00.000-08:002012-09-12T12:04:58.474-07:00Hidden Cost of COBRAIn the aftermath of the economic meltdown and resultant increase in unemployment, millions of American workers lost access to affordable healthcare through their employers. Normally, this would leave a former employee with a tough pill to swallow in paying 102% of the full insurance premium compared to what is normally a much lower cost since the employer's contribution is no longer applicable. In the past that meant that the only people likely to pay that increased amount were those who were most likely to cost the insurance more than they would be out of pocket otherwise. Statistically, it had been measured that a typical COBRA participant had a utilization of 150%, which means that for every dollar they paid in premium, they cost the insurance company $1.50 in claims. It's no surprise that the number of COBRA participants attached to a company's policy will significantly affect the overall premium for the group. After all, the insurance company must charge enough to cover their expenses and leave a profit on top. When the American Recovery and Relief Act (ARRA) was passed, it provided a subsidy to the COBRA premium of 65%, and it was expected this would draw in healthier COBRA participants and reduce the high utilization of that population. Oddly enough, although COBRA enrollment numbers climbed significantly due to the lower cost barrier resulting from the ARRA subsidy, the utilization remained at 150%. The high rate increases the last few years are a direct response to factors like this where the insurance company is attempting to balance out its losses by raising the costs to the healthier groups.<br />
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So what should an employer do? Since COBRA rights are fixed in the law and those participants will not be present in the work environment, the employer must focus their energy on the health of the active employees that are enrolled in the group plan in order to offset the claims of their COBRA population. Incentivizing healthy activities and eating habits are a great way to mitigate insurance increases. That kind of atmosphere also creates a more productive workforce with higher morale, so it's a win-win. A well trained HR professional can help craft, implement and maintain this kind of initiative with a minimal budget. The most valuable asset they'll need though, is executive support and buy in to help motivate the rest of the staff to follow suit.HR Haighttp://www.blogger.com/profile/09591831482444980639noreply@blogger.com0tag:blogger.com,1999:blog-497818674412650424.post-3007715859652165682012-01-12T10:51:00.000-08:002012-01-12T10:51:17.591-08:00Reputation vs. RegulationIn the world of employment practices, we are sometimes so wrapped up in determining whether a regulation prohibits us from doing a thing that we forget to ask whether we should do it at all. For example, because California is an at-will state, a company can generally withdraw an offer of employment at any time. However, presenting a candidate with an offer and a start date will probably lead that person to cease looking for other opportunities. If that offer is revoked, you can imagine the frustration the candidate is going to feel when they have to play catch up in the job hunt, especially if they declined other offers because they had already accepted yours. That frustration may even cause the candidate to look into legal remedies on the basis of discrimination, if they belong to a protected class. At the very least, a negative experience usually leads someone to express their dissatisfaction to 26 others. That number is more likely to be higher when the experience directly affects someones livelihood though. Eventually, this bad mojo affects the company reputation so much that it becomes difficult to recruit top talent who are then more likely to work at the competition. Because websites like Glassdoor and social networking forums like LinkedIn have accelerated and amplified the effects of negative employee experiences, it's extremely important to carefully consider how your policies can impact your reputation even if they are lawful.HR Haighttp://www.blogger.com/profile/09591831482444980639noreply@blogger.com0tag:blogger.com,1999:blog-497818674412650424.post-90733319351143444712012-01-09T11:38:00.000-08:002012-09-12T12:04:29.330-07:00Unpaid InternsWith the downturn in the economy over the past few years, we've seen an increasing number of unpaid intern positions pop up, which capitalize on the eagerness of people to work in any capacity on the chance that they may get a permanent job. This has prompted the Department of Labor to begin scrutinizing these positions to ensure that employers are in compliance with the wage and hour rules under the Fair Labor Standards Act (FLSA). There are six factors that need to be met in order for an intern to be unpaid:<br />
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<li>The training, even though it includes actual operation of the facilities of the employer, is similar to what would be given in a vocational school or academic educational instruction; </li>
<li>The training is for the benefit of the trainees; </li>
<li>The trainees do not displace regular employees, but work under their close observation; </li>
<li>The employer that provides the training derives no immediate advantage from the activities of the trainees, and on occasion the employer’s operations may actually be impeded; </li>
<li>The trainees are not necessarily entitled to a job at the conclusion of the training period; and </li>
<li>The employer and the trainees understand that the trainees are not entitled to wages for the time spent in training. </li>
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According to Advisory Letter 12-09,<b> "If the workers are engaged in the primary operations of the employer and are performing productive work (for example, filing, performing other clerical work, or assisting customers), then the fact that they may be receiving some benefits in the form of a new skill or improved work habits is unlikely to make them trainees given the benefits received by the employer."</b> In other words, if you are using interns as a form of free labor, you're probably out of compliance and could be the target of a potential wage and hour claim. As I've mentioned previously, the penalties piled on top of the owed wages can make this an extremely costly mistake, especially if unpaid interns have been a longstanding practice at your company.</div>
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<br />HR Haighttp://www.blogger.com/profile/09591831482444980639noreply@blogger.com0tag:blogger.com,1999:blog-497818674412650424.post-76826299664688840822012-01-03T17:17:00.000-08:002012-01-05T11:51:37.555-08:00The Right (Sales) StuffMost startup companies are born out of a clever idea and gobs of sweat equity in turning that concept into a product or service. The biggest decision you face at that point is how to market your product, draw in investors and reach your exit strategy. Unfortunately, product development skills don't always translate into sales savvy, so many founders must look to bring in leaders to grow their sales orgs.<br />
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Traditionally, the path to fast money and showing the "hockey stick" growth curve to boards has led companies to gravitate towards sales executives with backgrounds transactional sales models where quantity is the key driving metric. Initially, this method produces "revenue" numbers that prompts investors to throw tons of cash into the expansion of the company, which increases the operational overhead. However, when the incentive for the department is aligned with speed and quantity, shortcuts are usually taken, which manifests itself in escalating churn and more resistance to repeat purchases.<br />
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The boiler room environment is best suited for very simple transactions that focus primarily on a fixed, predictable cost to result relationship. For example, "X number of dollars buys you Y number of leads, which results in a Z increase in sales... how many leads would you like to buy?" However, if your product requires a better understanding of the client before the pricing can be prepared, like a media campaign or consulting services, the transactional sales org is most likely going to try and find a way to convert that into their model. This usually produces something along the lines of, "Our service will cost you less and produce X results for your business, so you should buy from us." The expectation set is that of a fixed result. The customer may believe this the first time, but if the results don't match the expectations, they will probably cancel and be unlikely to renew. That churn not only takes projected revenues off the table, but will also make it harder to course correct down the road due to the negative experiences accumulating in the market space about your company. Meanwhile, the accelerated growth will have left you with a tremendous overhead and with the inevitable sagging sales figures, your burn rate will go through the roof.<br />
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An alternative method known as the complex or consultative approach is based on the notion that the customer's needs must be understood in order to make their experience with the product or service more successful. This usually results in a longer ramp time and sales cycle, but provides solid revenues by minimizing churn and building a reliable book of business. The sales leaders that are most appropriate for this kind of role will come from a space where sales and account management are somewhat blurred. For example, consultative salespeople are often in regular contact with their clients, managing their expectations and reinforcing the value statement. This type of sales org is evaluated on metrics like activity, quality and retention. Opting to go this route may not generate as much of a funding frenzy, but will probably result in a much lower burn rate since the infrastructure will never get ahead of the pipeline. That means you'll be operating in the black and less affected by fluctuations in the mood of the funding community. It also creates real value in your company, whether your exit strategy is to sell or to IPO.HR Haighttp://www.blogger.com/profile/09591831482444980639noreply@blogger.com0tag:blogger.com,1999:blog-497818674412650424.post-27890747203776119942011-12-27T10:14:00.000-08:002012-09-12T12:05:26.529-07:00California Computer Exemption - 2012If you currently apply the overtime exemption under the California Computer Professional definition, be prepared for a cost increase in 2012. This exemption, which essentially allows companies to pay certain computer professionals on a salary basis if various criteria are met, is scheduled to see a 2.5% increase in the minimum salary requirement on January 1, 2012. This means that, in addition to the other requirements, you will need to pay your computer professional at least $81,026.25 next year in order to qualify, an increase of almost $2,000 over the current minimum. Of course, the cost to you as an employer is higher once you factor in payroll taxes and workers comp premiums on the additional pay, so it may be worth taking another look at the need for the exemption before committing to the pay increase. If your computer professional is working regular hours already, then you may not be getting much value out of paying him or her on a salary basis.<br />
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HR Haighttp://www.blogger.com/profile/09591831482444980639noreply@blogger.com0tag:blogger.com,1999:blog-497818674412650424.post-83060565647338134962011-12-23T10:21:00.000-08:002011-12-23T10:21:07.074-08:00Spreading The WordIn the endless sea of startups, one of the toughest challenges is finding a way to stand out from the crowd enough to get the magical "buzz" factor in gear. Without a strong network of contacts, finding a way to get people to try out your new site could get frustrating. Most often, we look to our friends and family to help us get to critical mass, but unless they can help you spread the message to the masses effectively, that's all you'll have in the end. I recently came across a really interesting concept that addresses this issue in a very clever way. Wahooly has established a base of highly influential users (bloggers, twitter fiends, industry pundits) that can help get out the word for your new startup. They're gathering applications from which they will select 200 companies to present to their users, who will generate buzz in exchange for a small piece of the action. For example, a company can offer 5% equity to be shared between 5,000 Wahooly users, who's influence could reach huge audiences and immediately draw mass attention to the site. This investment in the company motivates the Wahooly users to pull out all the stops when sharing the news with their networks because they don't get rewarded if it doesn't succeed. You can also use the Wahooly base as your initial beta users, giving you instant mass and valuable feedback. All in all, it's worth checking out as a means of accelerating the development of your business refinement of your site. Here's a link to learn more about <a href="http://wahooly.com/" target="_blank"><span style="color: blue;">Wahooly</span></a>.HR Haighttp://www.blogger.com/profile/09591831482444980639noreply@blogger.com1tag:blogger.com,1999:blog-497818674412650424.post-54028942008445949332011-12-22T10:00:00.000-08:002011-12-22T10:00:05.960-08:00Evaluating HR Options - Speed, Cost & Quality (Part 3)In our final part of this series, we'll consider the needs for quality in your human resources administration, then tie all of the factors together in a few typical solutions. When you're thinking of the quality of your HR, the main thing to remember is that there's no specific level or amount that's going to completely eliminate your risk as an employer. The true value of quality will reveal itself when things do go wrong and you find yourself prepared and organized to meet the challenge before you!<br />
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<li class="MsoNormal"><span style="font-family: inherit;"><b><u>Quality - How good does it have to be?</u></b><o:p></o:p></span></li>
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<li class="MsoNormal"><span style="font-family: inherit;"><b>Payroll: </b> Standard payroll processing is fairly straightforward,
allowing some to do it themselves with the right software. When you have
more complex needs though, like multiple worker classifications in
different locations, then you'll want to consider more than just the
mechanics of payroll and make sure it's paired with high caliber
compliance experts as well. There are variations in the laws between
states and sometimes even counties or cities, which can be overwhelming.<o:p></o:p></span></li>
<li class="MsoNormal"><span style="font-family: inherit;"><b>Benefits:</b> Traditionally, benefits are meant to help employers attract and retain top talent. These days, cost seems to have undermined this objective as companies strip down their plans to make them more affordable, which is beginning to frustrate their employees. One commonly overlooked area can help mitigate this effect though. 67% of employees that understood their benefits are more likely to be well received, particularly if the plan features have been diminished. The educational campaign needed to achieve this result comes from using benefits professionals that can do more than just explain what the copays and deductibles are.</span></li>
<li class="MsoNormal"><span style="font-family: inherit;"><b>Compliance:</b> The amount and complexity of the regulations you are governed by as an employer depends on your size, but you're on the hook even with your first employee. Working with templates may be oversimplifying things as they rarely cover the sheer mass of filings and forms that need to be maintained. Due to the constantly changing legal landscape, the language in your policies needs to be regularly monitored to make sure it's up to date. The more complex your employee structure is (independent contractors, exempt employees, multiple locations, etc.), the more experience you'll want someone to have in the area of compliance.</span></li>
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Whether your a new startup company or considering human resources for the first time, there are three main options for you: do it yourself, hire someone internally or hire a firm externally.</div>
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<b><u>DIY - Using templates and help lines to manage your HR administration.</u></b></div>
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<li>Speed - Since you'll be doing payroll and billing reconciliation for the benefits, it's going to take you more time to attend to the compliance duties you've taken on, so do as much prep work as you can in advance when you do have time.</li>
<li>Cost - All this option will cost you is maybe the access fee to the toolkit and a call center for HR help, so this will probably be the least expensive way to manage your human resources administration.</li>
<li>Quality - Unless if you happen to have some formal training in the field, you're putting your fate in the hands of the toolkit you're using, which may not be refreshed very often. At the very least, it will be up to you to constantly check to see if the updates are available, and that can get complicated if you're not sure which parts apply to you and your business.</li>
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<b><u>Hire Staff - Obtaining one or more professionals that will serve as your HR department internally.</u></b></div>
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<li>Speed - The average ratio of HR to staff is about 3 for the first 100 people, then about 1 per additional hundred. The high initial number is needed to make sure you have sufficient people to act as backups and provide areas of specialty. 3 people will work quickly enough to keep turnaround times low on most items because they can handle multiple tasks at once.</li>
<li>Cost - 3 entry level HR specialists will probably run you at least $100k/year in total compensation, so this will be the most expensive option on the table.</li>
<li>Quality - There's only so much expertise you can acquire working internally because you may not have experienced all of the things that could go wrong to know what to do. HR staff that come from a consulting background are more likely to have a well rounded experience, but be ready to pay top dollar to snag them for your own.</li>
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<b><u>Outsource - Contract with an HR firm to provide you with human resources administration.</u></b></div>
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<li>Speed - With their larger size and specialized staff, the firm is more likely to have efficiencies in place that get most tasks done quickly, especially when they require interaction with red tape factories like insurance companies and government agencies.</li>
<li>Cost - Because the outsourcing firm will serve as a cauldron of expertise and be able to take on many of the time consuming duties like payroll and benefits administration, you'll probably only need just one internal HR contact for them to work with. This would save you at least $60k/year and a good chunk of that will remain even after paying the firm for its services. You would also gain access to insurance programs commonly at lower rates because of their aggregated policies across their clients. However, if your company only has one location and your staff gets to more than 400 employees, you may find that the economies of scale no longer have the same value they did when you were smaller. In those cases, you can probably begin shifting to an internal HR structure.</li>
<li>Quality - Unless you hired HR commandos under option 2, you're probably not going to find a more seasoned team to keep you out of trouble than the outsourcing firm. You usually get specialists focused on the each of the separate HR disciplines who will be at the top of their game and have a constant pulse check on the latest developments.</li>
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As you can see, it all depends on what you need and what your means are. Sometimes rolling up your sleeves is all you can afford to do, other times you may be so big that an internal HR department is justified, but when you're looking to focus only on your business and grow, the outsourcing option is a good bet!</div>
</div>HR Haighttp://www.blogger.com/profile/09591831482444980639noreply@blogger.com0tag:blogger.com,1999:blog-497818674412650424.post-44139671396659329982011-12-21T05:00:00.000-08:002011-12-21T05:00:13.395-08:00Evaluating HR Options - Speed, Cost & Quality (Part 2)Now that we have evaluated our need for speed, we can begin considering the costs of human resource administration. Determining a budget for these aspects of business operations largely depends on what your expectations and needs are. However, as we'll see below, you don't necessarily get what you paid for in HR. Sometimes (sadly not always) a less expensive option can also be more efficient!<div>
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<li class="MsoNormal"><span style="font-family: inherit;"><b><u>Cost - How much should I spend on it?</u></b><o:p></o:p></span></li>
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<li class="MsoNormal"><span style="font-family: inherit;"><b>Payroll:</b> Depending on your needs, you might either do
this in-house or outsource it. Contrary to what you might think, it's
usually more expensive to have someone process your payroll internally.
Even a single entry level payroll administrator could cost you around
$35k/year! However, most companies will roll these duties into
another position to save money. The real question is whether you can
afford to have this responsibility fall on someone who will probably look
at payroll as something they need to "get out of the way" from
time to time. The penalties for mistakes can add up quickly because they
will probably be repeated on several payrolls before they are identified
and resolved. Outsourcing most likely gets you a specialist in payroll
for a small fee in the neighborhood of $7-10k/year for a company of about
10 employees.<o:p></o:p></span></li>
<li class="MsoNormal"><span style="font-family: inherit;"><b>Benefits:</b> The main area of benefits costs employers
are aware of are the premiums they're billed from the insurance carrier.
However, there's also a substantial cost in conducting staff meetings and
administering the billing and enrollment relationship with the carriers,
especially when offering many choices to your employees. If you employ
staff that are in high demand positions, like executives or engineers,
the least expensive insurance plan may not be attractive enough for you
to bring in top talent for your business.<o:p></o:p></span></li>
<li class="MsoNormal"><span style="font-family: inherit;"><b>Compliance:</b> Just being an employer places you at risk
for labor issues, particularly in more complex states like California.
Typically, the more experienced, diverse and specialized your compliance
team is, the more it will cost you. The amount you allocate to this area
will largely depend on your comfort level with risk. Most startup
companies face a domino effect of consequences due to litigation because
of the effect it has on their funding sources and in the press, so making
sure you have as much expertise as you can afford goes a long way towards
having peace of mind enough to focus all your attention on your product.</span><span style="font-family: 'Times New Roman', serif; font-size: 13.5pt;"><o:p></o:p></span></li>
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</div>HR Haighttp://www.blogger.com/profile/09591831482444980639noreply@blogger.com0tag:blogger.com,1999:blog-497818674412650424.post-39002741536534384602011-12-20T16:36:00.000-08:002011-12-20T16:36:55.947-08:00Evaluating HR Options - Speed, Cost & Quality (Part 1)The old adage from car racing of: "speed, cost, quality... pick two!" wonderfully illustrates the challenges many business owners face when developing their plans for growth as well as evaluating the services of third party vendors. Very rarely will you have two options where there's a hands down winner across all three categories, so it's important to decide what is most valuable to you. When considering your choices for human resources administration, this decision will have far reaching consequences if you're not careful. Over the next three days, we'll take a closer look at these factors applied across the core HR duties of payroll, benefits and compliance.<br />
<br />
<br />
<ul>
<li><b><u>Speed - How quickly do I need things done?</u></b></li>
<ul>
<li><b>Payroll:</b> Delays in payroll processing could get messy if checks are not issued when due. Depending on your pay cycle, you will have 7-10 days to issue checks after the cycle has ended. When dealing with terminations, you may even need to provide them a check on that same day!</li>
<li><b>Benefits:</b> Enrollment applications are usually done in advance of the effective date because most employers have a waiting period, so speed may be less relevant in this area if you're organized.</li>
<li><b>Compliance:</b> Timing can be critical when dealing with legal issues as deadlines can vary and huge penalties could apply. Although there may be lulls in the activity of this area, when something happens, you need to act fast.</li>
</ul>
</ul>HR Haighttp://www.blogger.com/profile/09591831482444980639noreply@blogger.com0tag:blogger.com,1999:blog-497818674412650424.post-84061237951450934542011-12-19T13:49:00.000-08:002012-09-12T12:06:04.591-07:00Alternative Work Week Schedules (AWWS)<span style="font-family: inherit;">The typical workday is 8am to 5pm, with a 1 hour lunch around noon, resulting in 8 hours for work. So what happens when you need someone to work until 5:30pm? Well, either you can have them start a half hour later or you'll need to pay them overtime for the extra 30 minutes. If you really need that 8am start time though, the extra 30 minutes per day of overtime could add up fast, especially if you have more than one employee this applies to. One solution to the need for extended hours is known as the Alternative Work Week Schedule or Compressed/Flexible Workweek. This basically allows the employee to work their 40 hours/week in a way other than the traditional 5 day week without incurring overtime until after 10 hours are worked in a single day. For example, you could a 4 day week at 10 hours per day without running into overtime issues.</span><br />
<span style="font-family: inherit;"><br /></span>
<span style="font-family: inherit;">Establishing an AWWS is not something to be taken lightly though. There are very clearly defined steps that must be taken in order to have one, so make sure you have an HR professional in the loop to keep you in compliance during this process. Here are the basic elements:</span><br />
<ol>
<li><span style="font-family: inherit;">Creating the policy - The employer can choose to implement a single schedule or offer employees the choice of a menu of schedules to pick from. The alternative schedule must include the regularly recurring number of days and hours, which employees it will apply to and how it will affect their wages and benefits. A notice of any meetings discussing the AWWS can also be included and must be provided at least 14 days before it can be voted on. While not a requirement, it's usually a good idea to think about how this alternative schedule will be affected by holidays.</span></li>
<li><span style="font-family: inherit;">The secret ballot - One common misunderstanding regarding an AWWS is that it is at the sole discretion of the employer. In fact, the employer can only present this alternative schedule to the affected employees, who must then be allowed to vote on it by a secret ballot before any work is done during business hours. The employer must hold the ballot on the worksite of the affected employees and bear the cost of conducting the ballot. The AWWS must be passed by a 2/3 vote.</span></li>
<li><span style="font-family: inherit;">Reporting the ballot results - <span style="background-color: white; text-align: justify;">The results of the secret ballot must be reported by the employer to the Division of Labor Statistics and Research within 30 days after the results are final. The report will be a public document and must include the final tally of the vote, the size of the unit, and the nature of the business of the employer.</span></span></li>
<li><span style="background-color: white; text-align: justify;"><span style="font-family: inherit;">Implementing the AWWS - You must wait at least 30 days after the results of the ballot are reported before you can have employees work under the AWWS. This time can be helpful in allowing supervisors to begin organizing their teams to ensure coverage is available on all of the days of the week.</span></span></li>
</ol>
<div style="text-align: justify;">
<span style="font-family: inherit;">At the very least, this process takes 6 weeks to complete, so think very carefully about the need to have an AWWS before investing this much time and energy into it. Also, once the AWWS has been approved, it can always be repealed by a 1/3 petition by the affected employees, which would require yet another secret ballot to be conducted. </span></div>
<div style="text-align: justify;">
<span style="font-family: inherit;"><br /></span></div>
<div style="text-align: justify;">
<span style="font-family: inherit;">Overall, the alternative schedules can be a valuable tool to manage the costs of overtime when the business hours extend beyond a traditional 5 day, 40 hour workweek. However, an AWWS is probably not a good solution in situations where you are simply understaffed, but must provide output in specific time frames, requiring long hours each day. The alternative schedule is very likely to be repealed in these cases, so there's not much sense in going through the trouble of setting one up to begin with. You may be better off looking to other forms of mitigating overtime costs, like whether any of your staff may qualify as exempt or streamlining processes to improve efficiency. HR professionals are trained to consider all of these solutions when addressing the needs of the employer while keeping the workplace compliant, because understanding why you're ruling out an option is just as important as finding the right solution.</span></div>
HR Haighttp://www.blogger.com/profile/09591831482444980639noreply@blogger.com0tag:blogger.com,1999:blog-497818674412650424.post-75170647504914775352011-12-08T16:39:00.001-08:002012-09-12T12:06:26.037-07:00Independent ContractorsIn the early stages of establishing a new company, employers often experience a period of sticker shock when seeing what is factored into the the total costs of hiring an employee. From recruitment fees to workers comp and payroll taxes, the costs stacked on top of the wages can add up quickly. However, when properly handled, the use of independent contractors can be a very clear and concise way to get work done. Since an independent contractor is a non-employee, businesses can take advantage of this fact to avoid paying payroll taxes, benefits and workers comp.<br />
<br />
The number one misconception about independent contractors, or "1099 workers" as they're sometimes called, is that the employer can choose to pay anyone in this manner. In reality, the determination of who can be called an independent contractor is managed by a number of government agencies, like the<span class="Apple-style-span" style="font-family: inherit;"> Employment Development Department (EDD), which is concerned with employment-related taxes, and the Division of Labor Standards Enforcement (DLSE), which is concerned with whether the wage, hour and workers’ compensation insurance laws apply. So what is an independent contractor? There are a number of factors that are considered, but basically think of it as someone who makes a living doing a particular task for multiple clients that isn't part of the core business of those clients, like a legal consultant for a flower shop. Here's a more thorough list of what is considered:</span><br />
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<ul style="margin-bottom: 1em; margin-left: 1.4em; margin-right: 0em; margin-top: 1em; padding-bottom: 0.5em; padding-left: 1.4em; padding-right: 0em; padding-top: 0em; text-align: left;">
<li style="margin-bottom: 5px;"><span class="Apple-style-span" style="font-family: inherit;">Whether the person performing services is engaged in an occupation or business distinct from that of the principal;</span></li>
<li style="margin-bottom: 5px;"><span class="Apple-style-span" style="font-family: inherit;">Whether or not the work is a part of the regular business of the principal or alleged employer;</span></li>
<li style="margin-bottom: 5px;"><span class="Apple-style-span" style="font-family: inherit;">Whether the principal or the worker supplies the instrumentalities, tools, and the place for the person doing the work;</span></li>
<li style="margin-bottom: 5px;"><span class="Apple-style-span" style="font-family: inherit;">The alleged employee’s investment in the equipment or materials required by his or her task or his or her employment of helpers;</span></li>
<li style="margin-bottom: 5px;"><span class="Apple-style-span" style="font-family: inherit;">Whether the service rendered requires a special skill;</span></li>
<li style="margin-bottom: 5px;"><span class="Apple-style-span" style="font-family: inherit;">The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision;</span></li>
<li style="margin-bottom: 5px;"><span class="Apple-style-span" style="font-family: inherit;">The alleged employee’s opportunity for profit or loss depending on his or her managerial skill;</span></li>
<li style="margin-bottom: 5px;"><span class="Apple-style-span" style="font-family: inherit;">The length of time for which the services are to be performed;</span></li>
<li style="margin-bottom: 5px;"><span class="Apple-style-span" style="font-family: inherit;">The degree of permanence of the working relationship;</span></li>
<li style="margin-bottom: 5px;"><span class="Apple-style-span" style="font-family: inherit;">The method of payment, whether by time or by the job; and</span></li>
<li style="margin-bottom: 5px;"><span class="Apple-style-span" style="font-family: inherit;">Whether or not the parties believe they are creating an employer-employee relationship may have some bearing on the question, but is not determinative since this is a question of law based on objective tests.</span></li>
</ul>
<div style="text-align: left;">
The most important thing to notice in the list of criteria is that the court does not feel that intention is very relevant in determining the outcome. Instead, the classification of who is an independent contractor is based on objective tests. In other words, the status of independent contractor isn't something that can be changed by intention or agreement between the parties.</div>
<div style="text-align: left;">
<br /></div>
<div style="text-align: left;">
The California Supreme Court applied this "economic realities" test in<span class="Apple-style-span" style="font-family: inherit;"> <i>S. G. Borello & Sons, Inc. v Dept. of Industrial Relations </i>(1989) 48 Cal.3d 341. The main factor in that case centered around the question of who was basically in control of the worker and the work being done. If the business could decide what work is to be done and how it is to be done, then the facts would lean in favor of the worker being an employee instead of an independent contractor. In other words, if you do things like have a set schedule, required format or method for the work, then you might actually have an employee on your hands. That employee would then be entitled to all the rights of other employees, like overtime and payroll tax contributions from their employer. That means you could be on the hook for some hefty back-payments and possible penalties!</span></div>
<div style="text-align: left;">
<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
<div style="text-align: left;">
What do you do then if you've already got "1099 workers" but aren't sure whether you're in compliance? The bad news is that correcting the misclassifications won't erase your exposure to all of the liabilities for the time that they were improperly paid, but you will be able to prevent that liability from growing. Moreover, the IRS has recently instituted a <a href="http://www.irs.gov/businesses/small/article/0,,id=246013,00.html" target="_blank"><span class="Apple-style-span" style="color: blue;">Voluntary Classification Settlement Program</span></a> to limit their past federal employment tax liability for current workers they are treating as non-employees by reclassifying them for future periods and paying a small percentage of the taxes owed in the current period.</div>
<div style="text-align: left;">
<span class="Apple-style-span" style="font-family: inherit;"><br /></span></div>
<div style="text-align: left;">
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HR Haighttp://www.blogger.com/profile/09591831482444980639noreply@blogger.com0tag:blogger.com,1999:blog-497818674412650424.post-41960322744350183752011-12-07T17:35:00.001-08:002011-12-07T18:17:12.721-08:00HR Checklist: Pre-Angel InvestmentAt this stage, startups are maybe just a concept that's been put into a powerpoint presentation to pitch to Angel Investors. You might be thinking that there wouldn't be any need to think about HR this early. However, if you get what you're looking for, namely funding, you're going to need to dedicate as much of your focus on turning your concept into a reality instead of researching employment laws all day. Doing a little homework at this phase may even help with your presentation to investors by showing that you're thinking ahead about managing risk and addressing the challenges of growing your budding enterprise. Here are a few items to bear in mind before you dive headfirst into becoming an employer:<br />
<u><b><br /></b></u><br />
<u><b><span class="Apple-style-span" style="font-size: large;">Talent Acquisition (aka Recruiting)</span></b></u><br />
<br />
Although most startups have a core of founders that are prepared to wear multiple hats to get things off the ground, there will come a time when specialist professionals will be needed to keep moving forward. Since that doesn't usually happen until later rounds of funding, for now just think about how many people you'll need to get a working model of your concept up and running. Recruiting firms can charge upwards of 30% of the annual salary of a position, so if you don't have all the people you need in the core group, it could burn through your funding pretty quickly. Alternatively, you could look into bringing in contractors on a project level basis or talk them into joining the team in exchange for a little equity.<br />
<br />
<b><u><span class="Apple-style-span" style="font-size: large;">Benefits</span></u></b><br />
<br />
Unless you have another way to obtain coverage, like through a spouse or your day job, your probably going to have to look into a way to get a group insurance policy for your startup to offer health benefits to your employees. The issue most entrepreneurs run into is that these policies are only for employees and don't extend to owners, meaning you'll need to get individual insurance for most everyone who has an equity stake in the company. The premiums in that market space vary wildly and can get pricey real fast, especially if you have health conditions. Because of this it can be tempting to forego offering insurance at all, but studies have shown that aside from pay, benefits are one of the most important factors for candidates considering an offer for employment. You could save yourself valuable company equity by thinking ahead and putting some of these programs into place.<br />
<br />
<b><u><span class="Apple-style-span" style="font-size: large;">Wage & Hour Compliance</span></u></b><br />
<br />
If you think you're going to need to hire even one person as a payrolled employee, you must be prepared for the litany of rules and regulations that you are subject to under state and federal law. There are strict guidelines for the manner and amount someone must be paid, mandatory meal and rest periods, regulatory postings you'll have to keep updated, etc. The penalties for breaking these rules are severe. For example, having to shell out $1,100 for each time you failed to pay someone overtime when it's due can chew through funding in a hurry and possibly cost you the confidence of your investors! Before you bring in that first employee, make sure you have a professional HR consultant or firm onboard to keep you out of trouble.<br />
<br />
<br />HR Haighttp://www.blogger.com/profile/09591831482444980639noreply@blogger.com1tag:blogger.com,1999:blog-497818674412650424.post-36554885869815223252011-12-05T11:36:00.001-08:002012-09-12T12:06:54.621-07:00Exempt vs. Non-ExemptTo most new business owners, employees typically fall into two pay categories, hourly or salaried. However, these terms fall under the much more complex classification standards of FLSA Exemptions. The Fair Labor Standards Act (FLSA) sets forth the criteria under which it is determined whether an employee is entitled to the benefits of overtime or if the employer is allowed to make that position <i><b>exempt </b></i>from that benefit. In a nutshell, when an employee's position satisfies certain requirements, it can be considered exempt and the employer may pay that employee on a salary basis. In other words, certain positions can be paid according to a fixed rate per pay period and wouldn't be entitled to receive additional compensation in the form of overtime if they worked past a certain number of hours.<br />
<br />
It's often thought that classifying employees as exempt is better for the company's bottom line. However, most employers don't realize that paying someone on a salary basis comes with its own set of rules. For example, an exempt employee is entitled to receive a fixed minimum compensation regardless of the quality or quantity of work performed in that period. In other words, you're not allowed to reduce an exempt employee's pay because they spent less time working in one pay period over another. On the other hand, a non-exempt employee will only receive wages for the hours that they work, helping keep a tighter leash against paying for downtime.<br />
<br />
The consequences for making a mistake on classification can be far worse than just an inefficient use of employee labor though. Criminal fines can be up to $10,000, with repeat offenders possibly being sent to prison. Civil penalties can reach $1,100 per violation, which would mean taking the number of employees affected multiplied by the number of times the wrong classification resulted in a violation. It goes without saying that taking shortcuts in this area can be a financial disaster. However, the damage can go much farther in the startup world, where investors are notoriously sensitive to ventures surrounded by bad press.<br />
<br />
In the end, you're much better off having a professional help you make these classifications before you even have your first payroll processed so you can grow without fear and fulfill your aspirations of funding rounds and IPOs!HR Haighttp://www.blogger.com/profile/09591831482444980639noreply@blogger.com0tag:blogger.com,1999:blog-497818674412650424.post-48756888503552527282011-12-02T17:05:00.001-08:002011-12-02T18:17:07.619-08:00HR Isn't Important For Small Companies... Right?It's a sentiment shared by many as they make their first foray into launching a new venture. Sadly, at the stage where your entire focus should be on developing your company, a flood of forms, registrations and insurance policies vie for your attention. Business owners are quickly consumed by tasks and responsibilities that are a far cry from what they had expected. This often gets delegated to the office manager who must contend with making sense of the thousands of complex labor regulations in addition to looking after the daily operations of the company.<br />
<br />
The average business with less than 100 employees will have about 3 HR personnel on staff, costing about $60-$70k in total compensation each. If you've just received your Series A funding, you may want to think twice before dropping nearly a quarter million of it on HR. A much more cost effective alternative would involve hiring an outsourced HR solution, because even though it would allocate specialized staff to your business, it doesn't penalize you for staff downtime between HR events, like benefits enrollment and new hire onboarding. In my next posting, I'll go over some choices for outsourced HR and talk about how you can find one that's a good fit for your company.HR Haighttp://www.blogger.com/profile/09591831482444980639noreply@blogger.com1tag:blogger.com,1999:blog-497818674412650424.post-80806927363635808822011-12-02T10:03:00.001-08:002011-12-02T10:19:43.882-08:00Why Startup HR?<div style="background-attachment: initial; background-clip: initial; background-color: white; background-image: url(http://assets.tumblr.com/images/input_bg.gif); background-origin: initial; background-position: 50% 0%; background-repeat: repeat no-repeat; font-family: 'Lucida Grande', Verdana, Arial, Helvetica, sans-serif; font-size: 13px; line-height: 1.4; margin-bottom: 8px; margin-left: 12px; margin-right: 12px; margin-top: 8px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">Many people have ideas, some go the extra mile to make those ideas reality. What most of them don't expect is the unending downpour of paperwork needed to stay compliant with today's complex labor laws, especially in the state of California. Worse yet, many aren't even aware of the requirements they are subject to when they start their businesses! Startup HR is a blog that aims to help new entrepreneurs focus on growing their businesses while minimizing their employment risks.<br />
<br />
I've been an HR professional for over 7 years and worked with literally hundreds of companies in evaluating and addressing their employment risks, often finding opportunities for reducing wasteful spending while establishing a more robust program at the same time. </div>HR Haighttp://www.blogger.com/profile/09591831482444980639noreply@blogger.com0