VANNOY:
Onboarding and compliance tips our small business survey results are in. And this is your opportunity to compare your business to over 2065 other small businesses in the areas of hr. I got a great guest today, those of you who watch the show regularly. Mary Simmons is our vice president of HR Consulting at Ashore. She’s a S H R M certified professional. Also, for the last eight years, she has been an adjunct professor at the New York Institute of Technology. Prior to that, Mary was the director of HR consulting for a 55 year old HR consulting firm in New York. Welcome back to the show, Mary.
SIMMONS:
Thanks, Mike.
VANNOY:
Okay, so this is really cool. If you missed our last show, we surveyed two, we got responses from 2065 small businesses, small business being anything under 500 employees, so anywhere from micro businesses on up to a couple hundred employees, and we asked them questions in eight areas spanning from pre-employment to post-employment. The areas are recruiting, hiring, onboarding, compliance development, performance management and retention, and then post-employment. For each of those eight sections, we asked five questions. So what we would consider be the areas of best practices around HR in that whole continuum of pre-employment to post-employment when hiring and managing employees. The last question in this survey was, what’s gold? We asked, what best describes your last year? Was it a fast growth? Did you grow? Were you flat or was it a down year for your business? Now clearly lots of things impact growth, pandemics interest rates, consumer demand, your competitors, we acknowledge that lots of things impact, but when you normalize across over 2000 small businesses, some really clear patterns emerge that we can say very clearly, and we’re going to share a lot of stats today and unpack this, what are the fastest growing companies in America doing different in the areas of people management and people processes?
A k, a HR versus those companies who had a down year? And again, we’re not crapping on people who had a down year. There’s lots of reasons that can impact that. You could be a phenomenal organization with great HR practices in market situation. You could still have a down year, but again, when you average it across 200, 2065 businesses, the data doesn’t lie in. Spoiler alert, those businesses that have the best people processes, those who lean in the best, who are the most compliant, have the implement the best practices, they’re the fastest growing companies in America. So let’s unpack some of the key statistics here. In our prior webinar, we took the first two topics of recruiting and hiring. Today, Mary, we’re going to unpack onboarding and compliance, which your favorite, right? Compliance.
SIMMONS:
Well, it’s all my favorite, you know that.
VANNOY:
Alright, let’s talk about onboarding. You love Jim Collins, great great author. He says, great vision without great people is irrelevant and nothing could be truer, right? So fast growing companies, here’s a big one. 80% of fast growing companies have an employee handbook updated In the past 12 months, only 60% of companies that had a down year or flat, so down or flat, have an employee handbook that’s been updated in the last 12 months. This is something that just sounds and seems so dry and boring. An employee handbook, what on Perth could an employee handbook have to do with my company growing? But you cannot run away from those stats. Over 2000 businesses. 80% of the fast growers are on their game when it comes to employee handbooks. Only 60%, still the majority, but it’s a 20% spread for a shrinking companies. Companies who are not growing don’t have updated handbooks. Take us through what you think the root causes are.
SIMMONS:
Yeah, so we’ve had many seminars about employee handbooks and to be clear, they’re not mandated by law. But again, this is why I love this study that we took because it’s so compelling and it helps the employers understand one of the many reasons you need an employee handbook. So the first thing is compliance. And even when I have an employer that we start with Mike and they say, don’t worry Mary, I just had an attorney look at my handbook. I’m sure it’s compliant. I say to myself, yeah, if an employment attorney looked at it, you probably spent six to $10,000. It’s probably compliant. But what you need to add is what are the best practices for what your competitors are putting in the handbook and where’s the culture piece? What in that employee handbook drives candidates? So when we’re recruiting, are we sharing our employee handbook when we’re close to making that job offer so they see all the awesome benefits that we give, so they get an infusion of our culture and say to themselves, that’s really an organization I want to join.
And then it helps us retain both our employees and our managers. It should make everybody’s job easier to have an employee handbook because any manager or a business owner that’s listening can agree with me that they hear all the time from their employees questions like, how many days do I get off? When can I take an employee leave? What holidays are we closed? When’s payday, what leaves do I get? Those questions are asked of business owners and managers every day, and you have a document where we can be consistent, where we’re kind of saving the time of the manager and the employee. It drives employee engagement and it just makes for a more professional, cohesive culture all around compliance and culture. That handbook is just, it’s the first thing I start with every employer because it’s that important. And these statistics show that,
VANNOY:
And Mary something that everybody’s going to get sick of me saying this, but I’m not going to stop. There’s this chicken egg versus the egg kind of a thing going on here. I don’t think we’re sitting here saying that if the simple act of putting together a compliant updated handbook is all of a sudden going to turn you into a growing business, the chicken egg scenario is here. Are you the kind of company that is proactive in your thinking about employee relationships and setting clear expectations, having good policies that are in alignment with modern day employment and what the best talent in the market is actually looking for? So it’s not the artifact in and of itself, it’s the artifact of the handbook is really the result of how a company of business thinks about establishing relationships, hiring, recruiting, hiring, onboarding, training, retaining their employees in the handbook is just the manifestation, the documentation to help set good expectations for what the real intent is. Anything you would add or subtract from that?
SIMMONS:
Yeah, I think that that’s well said Mike. And I like that you made that distinction. And what I would add is these eight categories are the eight categories I’m going to take every employer through when they’re connected with Assure Consulting, HR, consulting. And so it’s not just one piece, it’s all of these pieces put together. And yes, you can have all these pieces and have a downturn in economy or your competitor out bids you on price or whatever. So it is a complete holistic look at a business. We’re not saying that if you do all of this, all of a sudden your profits go up. Of course we’re not saying that, but what I am boldly saying is that if you don’t follow these guidelines with all of the good stuff, you might have an uptrend, but it’s not going to go where you want it to go because you can’t do it without an engaged, productive workforce. And all of these eight items, we’ll put that together.
VANNOY:
So just to recap and before we move on to the next topic. So 80% of the fast growing companies have an employee handbook updated. In the last 12 months, 60% of flat and down year companies had an updated handbook. So it’s still the majority, but there’s a 20% spread. So 20% versus the 60%. So you’re a third more likely to grow. Statistically speaking, you’re a third more likely to grow. If not, you have an employee handbook. If you are the kind of company that really thinks through and leans into employee relationships, expectation setting and policies and procedures that align you with the employee. And the manifestation of that is the employee handbook. So super powerful. I can’t think of all the things, the ways companies spend money on hiring sales reps doing marketing, product improvement, how hard you squeeze vendors to squeeze every penny out of margin, an employee handbook. And this attitude to have a 33% chance of growing your company on one simple thing is just gigantic. And it sounds ridiculously simple, but it’s because it’s all about people, right? Let’s
SIMMONS:
Move on. It’s simple. It’s simple. It’s a communication to your employees. It’s simple. Just do it.
VANNOY:
Okay, here’s another one. The stats play out almost the same, what I’ll say at the underperforming companies, that’d be no offense to those people who have the down year, but the underperforming companies were slightly better here. Again, 80% of growing companies have a first day checklist. So just show up to the job and you got a checklist of here’s what you do versus companies that didn’t experience growth. So flat and down year, 66% of those have a checklist. So again, ridiculously simple thing. A first day checklist, I think it might sound like a little bit like a broken record on the last one, explain the gap from 66% to 80%. What’s that? 14% more likely to be a growing company, but just having a perfect checklist in place.
SIMMONS:
And I’m going to take a little professional license here because this is the next thing that I’m going to knock off with a client, right? I’m going to do an HR assessment and one of the first things I look at in that HR assessment is, do you have a checklist for the first day, for the onboarding, et cetera. And I’ll look at them. So those 66, very often, Mike, I’ll look at that checklist and say, okay, you’re missing some compliance forms. So I’m always going to look for compliance and I’m going to look for best practices, culture engagement.
So what I’ll add to that is, hey, what do you do to welcome them? I see a lot of robotic things on this checklist, which are great. I see compliance things like I need to call ID and make sure that their computer’s working, give them their email address, show them the bathroom, things like that. But do you also have that on that checklist that you give them some organizational swag, right? Give ’em a coffee mug with your company name on it, give them a gift card to go get Starbucks, take them to lunch. Is that on the checklist? Did you schedule lunch with the manager, with a mentor, with the owner, et cetera. So beyond the compliance piece, what are you doing to engage that employee right away? Everybody can remember their first day at work, right? Again, you have one chance to make a first impression, make sure it is compliant, right? I’m always going to stand on that pillar and then I’m going to switch to how are you engaging that client, that employee right off the bat. So besides all that compliance stuff, what’s the training schedule? How does it look for their first week, first month, first three months? So you retain that employee so they don’t get overwhelmed in those first couple of weeks and go, this is too much. There’s plenty of jobs out there, they’re disorganized, I’m out.
So super important for retention and engagement and setting expectations. And of course the compliance piece.
VANNOY:
And again, chicken versus the egg. If you have a crappy first day planned and no one intentionally plans a crappy first day, but if you don’t have a plan, they may or may not have their laptop ready. They may or may not have a lunch scheduled. Our other coworkers in the office that day that they can actually formally meet or they expected to just rub elbows with each other at the water cooler on lunch break. I mean, it’s not the artifact of the checklist, it’s the fact do you have a plan? If you have a plan, just by definition you’ve thought about it and if you’ve thought about it, you’re trying to make their first day meaningful and memorable. So it’s probably not that, again, it’s not the artifact of the checklist, it’s the attitude that goes into creating a checklist.
SIMMONS:
Okay, a hundred percent.
VANNOY:
Yeah. Next, 75% of growing companies have new hires go through a formal orientation. And here’s the specific part of the question that I love. 75% of the growing companies have new hires go through orientation to learn the company’s mission, vision and values, not job training, not skills, not here’s where the bathroom is, here’s your new laptop, here’s how you use email. It’s training orientation on mission, vision, values. 54% of the companies who had a down year do the same thing. So 75% versus 54%, so roughly half versus three quarters. Explain why that would be in the importance of mission, vision, values.
SIMMONS:
So it’s very important as part of their engagement to let the employees understand the why. Why are we here? Why are we making widgets? Why are we selling whatever we’re selling? What is the mission? What is the vision? What are the values? Get them to buy into where the organization is going so they feel part of it. If they don’t feel like they’re part of the organization, productivity is going to go down, engagement is going to go down, and that hurts the success of the organization. The organization has those mission visions and values for a reason. And the biggest reason that I would say besides sharing it with stockholders, if you’re a publicly traded company, I would share it with your employees because you want them to be part of it because that’s how you’re going to achieve that mission, vision and values. That’s how you’re going to retain staff. You need your employees engaged. You need to let them know the why for you to reach your goals with them together. They help you reach your goals. Very important.
VANNOY:
Yeah, great. That’s the
SIMMONS:
Culture piece.
VANNOY:
Absolutely. And again, it’s not artifacts. If you don’t have mission, vision, values, that means you can’t do the training. You can’t do an orientation in something that doesn’t exist. And if you are developing one, the simple act of getting leadership in a room and just talking about it, seriously, what is our mission? Why are we really here? What’s our vision to get there? What are the values that we’re going to embrace publicly as a company that kind of underpin our pursuit of that mission? Right?
SIMMONS:
Exactly.
VANNOY:
Simply talking about those, you bring an organization together, right? Yeah. Okay, last one on the whole topic here of onboarding, one in five of all companies. So regardless whether they’re fast growing, shrinking, one in five vault companies we surveyed are at risk of a failed immigrations and customs enforcement audit because they do not train hiring managers and staff how to complete I nines compliantly. So common theme, we talked about this in the last webinar we did on rooting in hiring, big spread in the HR best practices between the high performers and underperformers around HR best practices when it came to compliance. Everybody struggles here. So why is it that you think underperforming and the fast growers, why is everybody struggling with I nine so much
SIMMONS:
Because they haven’t gotten trained? So it’s a relatively simple form. And when we did the webinar on this, you and I are like, I know this is going to kind of sound relatively easy and why are we spending an hour on it? But it’s not that simple of a form. And you should know that by the fact that ICE is coming out and doing audits and any agency that comes out and doing audits, they’re looking for mistakes, right? So yeah, you might learn something from that, but you also are going to get huge fines, right? So you want to make sure a lot of the organizations that we work with, Mike will say to me, yeah, we’re a construction company. So the first day on the job, the guy might get his I nine done by his project manager out in the field sitting in the truck, the project manager is looking at his ID because that construction worker may never come to the office or might not come for a little while, and that I nine has to be filled out within their first three days.
And then I’ll say, have you ever trained that manager? And they’ll look at me, right? And they’ll hesitate. It looks like a simple form and it’s relatively simple form, but you just put white out or cross out and they’re going to fine you for that, which sounds a little ridiculous to you and I obviously it’s not to ice. So they are looking for mistakes. So organizations are making a mistake if they don’t train everyone who completes an I nine on how to do it, that’s my next step. That’s part of my HR assessment. Who’s doing the I nines? I look at them, I audit them. I would say, I’ve been doing this for 30 years. I have never looked at I nines, never. It’s a bold statement and not found errors, never. Wow. Even with HR professionals.
VANNOY:
And so we don’t have to rehash the entire I nine show that we did encourage people to hop on the website and watch that episode. If they got questions, just rattle off maybe what are the top, call it three areas that people make mistakes with I nines.
SIMMONS:
So the first one usually is that they don’t complete it within the first three days of employment. So that’s a big deal. They forget to tell the employee to bring the identification with them, not copies, not have their wife get on a teens call and show it. It has to be the physical document. Now, we can do that virtually now, and there is some changes out there, but the I nine has to be completed within the first three days. That’s the first mistake I see. The next mistake I see is that there are missing areas, so they didn’t fill in particular areas. A big one is that the employee has to sign the first half of it, the top section of the first page. A lot of times the employee forgets to sign that and or forgets to put the date. These are all fineable mistakes on the I nine and then the crossouts. And the whiteouts. You can imagine how many times have you filled in a foreign form, say at the doctor’s office or something, and you’re like, oops, put last name in the first name box. You can’t do that. You got to start all over. They’re not going to accept that lots. And I’m just going to add expired form now. Right now, everybody’s using an expired form because ICE hasn’t come out with a new form yet. But I see forms from 2008 that employers are using. They just forget to look for the new updated forms.
VANNOY:
I think sometimes people mentally think this is almost like you’re filling out a W two, and maybe they didn’t fill out it correctly, but what really counts is that I’m taking the property deductions from the paycheck. What actually matters? I know actual piece of paper matters, right? Yes. Okay. So to kind of recap on section number one, onboarding. So we talked in prior session recruiting and then hiring. But day one in the job, the best companies, they’re doing orientation on mission, vision, values. They have a first day checklist and where am I? I’m sorry. They actually have an employee handbook but not just have it, they’re going through it with their employees. So onboarding, you can recap it. It’s all about communication and expectation setting. You can’t train and set expectations on processes that don’t exist. So the chicken versus the egg, you got to have the processes. You got to be forward-leaning in how you think about people in building a productive organization and getting the most from your people. And what are those processes? What are those policies they manifest themselves in? Handbooks and mission, vision, values and checklists. And then the artifacts is your communication vehicle. And that’s what the fastest companies America are doing. And you got to get compliance and everybody struggles with that
SIMMONS:
Trying.
VANNOY:
Okay, let’s move to topic number three. So again, it’s the eight topics from pre-employment to post-employment. The next one is compliance with laws and regulations. So fast growth companies, they’re 22% more likely to train managers about HR laws like equal pay over time Americans with Disabilities Act compared to companies that experience a down year. What is it? So this is compliance. This is, Hey, I’ve trained you on mission, vision, values and the productivity improvement is probably the result that I actually have. Mission, vision, values. Why do you think there’s a 22% spread on my fast-growing companies versus shrinking companies when just simply training managers on HR legalities, if you will.
SIMMONS:
So I think I’d summarize this section, compliance and communication. So it may sound to a lot of employers, why am I training my managers on HR compliance Mary’s team be handling that or the in-house HR person be handling the HR piece? Well, why it’s important, Mike, is because our managers are on the front line. So let’s take Americans with Disabilities Act. If an employee says, I have a problem with my leg, I can’t go up and down the ladder. And the manager says, well, tough luck if you can’t go up the ladder, I’m going to fire you. Well, they really should have understood that that may be eligible for a d a and they should talk to somebody in human resources. And then my team would enter into reasonable accommodation conversations. And then again, that’s going to hit two pillars of a really strong organization compliance.
So we’re being compliant. We’re not going to have liability because we had a manager say something erroneous because we didn’t train them. Mike, it’s our responsibility to help the managers understand the basis of these laws and then say, oh, when I hear those words, that’s my trigger to say, go talk to Mary’s team. Go talk to human resources. And then the other piece is, let’s face it, it’s culture. I think everybody can understand that A manager saying, well, if you can’t go up the ladder, you can’t do your job, maybe you shouldn’t be here. And this is past experience. That’s an exact example from a past employer that I’ve worked with. That’s not a good culture, that’s not a positive culture. So what can we do to have a reasonable accommodation so that we retain that employee? So there are so many laws out there that it’s very hard for organizations to keep up with over time is a huge one.
Again, our managers are on the front line, Mike, so I hear this. If I hear at least once a week, I’ll start talking about overtime. Do we call it HR one oh one training with the managers? And I’ll test them and I’ll say, what if Mike says, Hey, it’s Friday and I’m going to end up working two hours of overtime because I have so much to do today. Is it okay if I work, I just come in late on Monday instead of getting the two hours overtime. I’d rather come in late on Monday and the manager says, yeah, sure, that works for me. Mondays are slow if we don’t train them, that is a huge liability for the organization. So managers are on the front line, and I will take this one step further that the managers want to do their job correctly. So we need to train them in all of the aspects of their job to show them we support them and to help them not make errors that’s going to hurt them because an employee quits because they said something wrong or the organization gets sued.
VANNOY:
In that case, I think it is also an opportunity just to earn trust with the employee, right? It’s like hundred percent be like, Hey, if this is my money and laws didn’t matter, I would happily do that. That seems perfectly reasonable. Unfortunately, it’s illegal. Fair Labor Standards Act says I have to do this, so I really don’t have a choice here. I’d love to do it. Let’s talk about there other accommodations that you can do in the future or whatever. But I can’t not follow the law here, and I think that’s a hell of a lot better than just saying no. Right?
You have a foundation for why you’re saying yes or why you’re saying no, and that just didn’t, it develops trust with your employees. I’ll say something else that jumps to my mind on this. One had a friend, small business owner, and at a point where, and good person, good person had a sales rep that ended up suing for retaliation because this person changed the sales rep’s comp plan. The sales rep saw it as retaliation, the employer, I’ll take the word for it. They were genuinely trying to help the sales rep be more successful, make more money. Ironically, I believe
SIMMONS:
It. I believe it.
VANNOY:
That’s not how it played out. And so the thing goes to court costs this employer a bunch of money. Coincidentally, this business was kind of teetering for its survival at the time. So even if you do things right, you win the case this person ended up doing, there was still cost to defend at a time when that business couldn’t afford to spend a penny on anything but growth, right? And so when I think about the context of 2065 business owners responding to this survey so heavily weighted to the fast-growing companies, it might not be that, hey, the trust, the relationship, the communication, those are all totally valid things. There’s also just the reality if you do it wrong, this can be damned expensive in how can you grow your business if you can’t buy inventory or if you can’t pay workers to actually fulfill orders because you spent all your money on fines and lawyers and whatever else, right?
SIMMONS:
Absolutely. And then the cost to the other employees, it hurts the culture of the organization.
VANNOY:
Yeah. Okay. I’m going to come back to a topic. So your experience would be, and you said in your 30 years you’ve never seen anybody without a single mistake because I, nines are such a big deal. We stuck the I nine question both into onboarding because clearly it’s an onboarding task, but I nines aren’t just an onboarding thing, right? It’s a compliance on ongoing that you have to maintain I nine. So we stuck it in here twice and we asked, do you keep a form I nine for each person you hire? And for one year after their employment ends, 17% across the board, they don’t. Why is this stat so important? It’s probably self-evident, but drive this one home for us, Mary.
SIMMONS:
Yeah, I think those fines can put somebody out of business. So you need to do those forms, but you need to do ’em correctly. And I will tell you, Mike, a little statistic that again, in my professional experience, I would say there’s still 10 to 15% of employers who are not doing I nines, either knowingly because they’re hiring people who will not, cannot satisfy the I nine because they just can’t find help right now or unknowingly and say, I nine, what’s that? And that’s why a lot of times when employers will say, I don’t need hr. This defines HR in a different way, and I’m hoping that employers are making that connection that HR isn’t just employee relations, it’s all of these eight pieces that come together, these topics that come together to make a successful organization. It’s not just employee relations, it’s employee relations in all of these different areas, compliance and communication. That’s going to drive the success of the organization with a lot of other things. But I’m going to make a bold statement that you’re not getting there for sustained time without having a strong HR function. You can’t do it without your employees, right?
VANNOY:
Yeah. Here’s one that I think, especially small growing businesses, growing or not growing is the case may be they don’t think about because man, you’re just struggling to try to survive. But interesting, 36%, so more than a third of businesses who identified themselves as being flat or having a down year do not have a documented process for handling HR investigations and queries. How does that one make sense to you? So a third of all businesses that don’t have formal process for investigations queries, somebody wants to report something to hr, they want to ask hr, Hey, such and such happened. How do you correlate that to lack of success in growing your business?
SIMMONS:
So when an employee has an employee relations issue of certain gravity, so let’s just say that it’s a harassment or a discrimination complaint that they have, if an organization does not take that complaint seriously and conduct an investigation, one of two things is going to happen. That employee is either going to quit and silently go off in the night and now you’re down another person, you’re back to the hiring circle where you can’t find anybody. Or the second thing that’s going to happen is they’re going to go to the E E O C or the Department of Labor for that state and make a complaint. And those agencies during the pandemic, although the audits were way down and they’re starting to trickle up again, what they did was they made it really easy for employees to make their complaints three years ago, four years ago, for some of those agencies, departments, you had to go down and fill out a form, which sounds so antiquated to us now.
Now there’s posters on subway cars in New York City that’ll say, and other areas that’ll say, you’re not being paid or you’re not being treated. Here’s the email, here’s the website. You just go right on and you make that complaint. So these agencies are making it easy for employees as they should, because if people are not being treated, they should do it, but the organization needs to do an investigation. You want to know if your managers or employees are treating each other improperly, and it may be just unprofessional, but it may leave you liable for some kind of legal action. You need to know that, Mike, you need to do an investigation. You need to protect the employee, protect your managers, protect your organization, and you can’t do that without doing an investigation. And I would say that that investigation needs to be done by a professional. We do plenty every single week, and the reason for that is if you don’t do it correctly, Mike, you may cause more harm than good.
VANNOY:
I’ve said in training sessions that you’ve put on for clients in the one word that you always start and end with is the word respect, right? Correct. I think it just so applies here. Again, it’s not the policy or procedure whether you have an escalation path and document in your handbook in and of itself, it’s at least in my opinion now, are you or are you not creating a culture where people feel respected? And if there is no documented escalation path or process, it doesn’t mean you have a bad culture, bad company, but if something does come up and the employee’s just simply unsure of where to go to, I mean, maybe it’s not even the lack of trust that you have by not having the policy, it’s the trust that you do gain and earn and develop and nurture when you do have a policy.
So if you hire me and you say, Hey, God forbid anything happens here, we want to make sure that you feel safe and respected, and this is an environment where everyone can feel comfortable, and we are a team, and so sometimes that means you need to be able to talk to someone, maybe even confidentially about a sensitive issue. We want to provide that path for you. So I think it’s not the process itself or the document, it’s the person who has that mindset and you communicate that heartly with the employee, that employee’s thinking, wow, what an amazing company, right? Actually so far ahead, they’ve created this process, this system, this path for me that hopefully I never have to use it. And so I think this is one of those things that you can gain in the positive, you don’t necessarily lose in the negative, which probably explains why the faster growing companies have these policies.
SIMMONS:
Absolutely. Listen, all organizations will say to themselves, I have process around getting new clients. I have process around making the widgets that we make providing great customer service. You also have to have policies and procedures for your employees. If you don’t, the complaints are just going to fly around the organization and it is like poison in your culture and it takes your productivity way. You don’t want two people complaining to each other versus doing the work they’re supposed to do. Have a process, have a procedure, be respectful to your employees.
VANNOY:
Right? Alright, last one here, and we’re going to wrap up on compliance with laws and regulations. Topic number three of the eight, nearly one in four companies who experienced A down or flat year are not certain they’re compliant with F L S A wage and hour requirements. So what’s your experience of how compliant is anybody on F L S A? I don’t want to sound overly critical. What percent of small growing businesses even know what F L S A is?
SIMMONS:
Yeah, and why would they? Right? So where would you find that information? Right. A lot of times I get on the call with an employer and they’re like, yeah, I just Google search if I have a question. I’m like, but you don’t know what the Fair Labor Standards Act. It’s a federal law. It’s going to apply to you. You can’t Google what you don’t know and how would they know it? That’s why having an HR presence, just having some professionals assist you with hr, even if you have five employees, is important. And as you know, we could spend all day on the Fair Labor Standards Act. I’d say one of the most important policies there is that every single employee must be classified exempt or non-exempt. And I would say, and this is a bold statement, but I’m going to say at least 50% of the employers that I speak with are erroneously classifying those employees.
What does that mean, Mike? That means if you have them as exempt versus non-exempt as an example, and you did that for just a year and that person worked overtime, that’s a very large lawsuit, right? Wage and hour claims, outre discrimination claims, so it’s overreaching. That’s just one piece of F L SS A. We’ve done webinars and you’ve done them with Jackson Lewis. This is a tough one to end on, Mike, because I could just keep going on and on and on, but I will wrap up by saying these areas, all eight come down to communication and compliance, and F L S A is a very large compliance piece that all employers have to be aligned with, and if one out of four aren’t sure they’re in line with it, it really drives home the fact that HR assistance is needed.
VANNOY:
And I’ll say this one is getting exponentially harder. F L S A, the Fair Labor Standards Act go back to 1938. It’s a federal law and there’s been updates and revisions to it constantly, but the important thing here is, so we can never unpack all that’s in the F L SS A in this show, but the biggies child labor over time, exempt versus non-exempt minimum wage. These are some of the basic things that got established with ffl SS a, and so take minimum wage, for example. Minimum wage is no longer a federal thing. I think most people know this. There’s like a hundred, I want to say it’s 30 of the 50 states have their own version, but much more importantly, local cities, counties, municipalities are passing their own versions. And so it’s
SIMMONS:
Something
VANNOY:
147 today in trending up unique jurisdictions of minimum wage, but it’s not as simple as the hourly rate. It’s like, well, if I’m in this industry, then this is my rate. If I’m in this industry, that’s my rate. In some states, others, it could be maybe if I’m in this city or in this county, but also maybe within this city I have to file a federal law. But here’s this one category of employer that actually this is the rate, right? And if you don’t do this, then this is the rate. There’s so many if thens and they’re accumulating on each other that F L S A, I think for most people it says one in four of people who experienced it down here are not certain they are compliant. I suspect this is an area where there’s a lot of false confidence even amongst the fast growing issues.
SIMMONS:
Yes, I agree. Yeah,
VANNOY:
Mary. Okay, so that kind of takes us on some of the highlight of this. So we’ve got two more webinars to go. The next one we’re going to unpack developing people development of your talent in performance management. Those two things kind of go hand in glove. The last one we’re going to do show on this topic will be around retention and then post-employment. Anything that you’d want to recap here on the onboarding and compliance piece?
SIMMONS:
So I try not to scare employers, but sometimes it’s important. So when I talk compliance, sometimes I can hear the virtual eye roll from employers like, ah, I’m compliant enough or I’m compliant. But the wage and hour division recovered $32.9 million just from the construction businesses last year and 27.1 million just from food services last year. So you can imagine how much from the entire businesses they recovered ice, same thing. Those numbers are exponentially growing as time goes on. So you need to protect yourself on the compliance side, not just because I say it, not just because Mike says it, but so that you can stay in business and not have the fines. And then the second piece is the communication piece. Hopefully we’ve driven forward the reason for that, but the biggest reason is you got to engage your staff, right? Mike? An engaged staff is a productive staff and we’re here to help you be successful, and I think this is a pretty easy equation to put together.
VANNOY:
Yeah, I would, maybe my closing thoughts on this would be, and this is going to be revealed in the next two shows we do on the remaining four topics, certainly was on show number one and show number two here, the best companies, let me rephrase that. Not the best. The fastest growing companies are those companies with the best people processes. So I say HR best practices, but it’s really do you think about what your mission, vision values are? Do you have an employee handbook because you want to be really forward-leaning in your communication and expectation setting with employees? Do you have job descriptions? Do you have job descriptions that talk about skills and competencies required to perform the job, and therefore those skills and competencies manifest themselves in good job postings? All these things sound so stupid, simple and kind. In some ways they are, but if you don’t have those processes, the reason is because you’re not forward leaning on people and how am I going to attract, develop, and retain the best people that I can grow my company with?
If you treat people as kind of transactional, they’re cogs in the machine, so to speak, spokes of the wheel, then you probably end up with a more transactional approach. And so you don’t have these artifacts of job descriptions and compliant postings in a documented interview process and employee handbook. I’m just here to say, yes, these artifacts are important, but much more important is what is your attitude towards human beings, towards acquiring people, building a team that gets behind your mission, vision values to help you grow your business. When you have the right attitude towards people, the right processes, and then the right artifacts manifest themselves that, and everyone struggles with compliance because it getting more and more complex every single day. To me, those are the punchlines that they’re going to come out in every show here.
SIMMONS:
Perfectly said.
VANNOY:
Yeah. Yeah. Mary, love talking to you. Thank you. Looking forward to next week where we unpack development and performance.
SIMMONS:
Sounds great. Thanks Mike.
VANNOY:
Talk to everybody else next week. Thanks.