Startups Are Enjoying Human Resources A La Carte

Image courtesy of Flickr.com.

The definition of “a la carte” is: separately priced items from a menu, not as a part of a set meal. I am seeing a trend in my business that suggests that HR has a value in businesses still, but the need and delivery preference is more “a la carte” in nature. This means that smaller companies and startups don’t have the capital, need or want for a full-fledged HR department, but will seek out different aspects of HR expertise as the need arises.

How does this work?

Let’s just say you have a startup and you have five employees currently.  Perhaps, you operate your business in multiple states and have a mix of both contractors and employees. At some point (hopefully not when it is too late) you are going to need to understand if you are complying with all of the employment laws. Moreover, you will want to know that you have a sound plan for managing people as you grow.

If you own a startup and you already recognize what you don’t know – you may opt to bring in someone with HR expertise to audit what you have done to date and help you figure out what the right roles are as you continue to expand your business. That HR person doesn’t necessarily need to be a permanent fixture within the company, but they are a call away if some other “people” related concerns crop up.

This option of a la carte HR services is a flexible option for startups and smaller companies. When you initially start your business, money is scant. You are lucky if you have enough to bring on someone for a couple of hours – let alone a full-time HR Generalist. Bringing in HR expertise as it makes sense for your company not only keeps you in compliance, but ensures that you have someone looking at your growth through the lens of your people.

Let’s take something as simple as recruitment. You are a startup. You’re using multiple sources to create buzz for a few new roles you have within your company. It has been my experience that recruitment efforts are made constantly without a look at whether the company is getting the biggest bang for their buck. Now this oversight isn’t specific to startups and smaller companies, but the impact of those missteps are much more visible and palpable when you are in a growth state.  There are also cracks and/or bottlenecks in their hiring processes that get overlooked. Again, not a mistake that hasn’t been made elsewhere – but a mistake that can hinder your growth as a startup before your business begins to gain traction.

How do you build an empire without considering what people you will need to get there?

This is the one question every founder should be asking themselves. As a founder of my own company, I am fortunate to have the big ideas and have a deeper appreciation for utilizing HR practices to enhance my business. I have that advantage since I worked in HR for ten years prior to going out on my own, but what about those founders who aren’t like me? Are they shooting themselves in the foot by not having some HR expertise in their back pocket?

My answer is: Yes.  You may not love what HR has stood for over the past 30 years. For that matter, I am not a fan of the stances we take when it comes to certain organizational issues. However, I think we can all agree that ping-pong tables, unlimited time off and flexible work schedules haven’t exactly solved the unhappiness at work quotient if you speak to people working at startups.

Startups are often regarded as the anti-establishments working in mostly unorthodox ways that don’t conform to a specific business standard. In many ways, it has been helpful to see something other than the usual corporate modus operandi at play; but perhaps there are some fundamental things we can’t wish away. I think one of those fundamental things is HR. You may wish HR didn’t exist, but there is virtually no way for a founder to be successful in growing their business without a plan for how you will manage the people that will be pivotal in helping you grow your empire.

Here are some things you need to do now if you don’t have an HR consultant on speed dial or an in-house HR person:

1) Look at your current roster of employees and consider whether you are complying with all of the employment laws in your state and federally. If you can’t answer a resounding “yes” to that question,  you need to find someone to look at your workforce immediately.

2) When you find the HR authority for your business, don’t just look for a popular blog, do some research. I shouldn’t have to tell you how popular “faking it until you make it” has gotten. Be sure that you vet your HR person’s expertise and feel comfortable with their approach to your needs. This can be sorted in a consultation. Do your homework.

3) If you’re looking to keep this endeavor budget-friendly, choose one area that touches your workforce and allocate funds for that. Focusing on improving one area that can have a positive impact on your company is better than doing nothing at all.

3a) While we’re on the subject of budget, make sure you allocate budget for HR in the first place. I don’t care if this is for a cluster of consulting hours. HR expertise for your specific needs is not free. Having some budget can get you the right professional.

For those of you who have been reporting that HR is dead, it appears on my end that it is still very viable and much needed. We may need to rethink how we package it, but we are far from being six feet under.

If you don’t believe me, even Fast Company agrees. Check out their May 2016 8 minute read article about it here.

Why Self-Auditing Matters

Courtesy of Flickr.com

Courtesy of Flickr.com

 

For you among the crowd that have been involved with audits whereby an infraction was found and you had to pay up- it cuts deep. It stings even worse when in hindsight you recognize that you weren’t proactive and missed something that has now cost the company money. The ultimate question from the top will always be:  “how did this happen?” How will you answer: “I don’t know”, “I’m sorry”, “It was a mistake”. Mistakes happen. However, when your mistakes are preventable and they cost your company money that could have been used for other endeavors-HR is going to take some heat and rightfully so.

Take a small to mid-size business (SMB) for instance. You are a business that makes a specific coating for tanks used by the US Military and your federal contract is worth 2.5 million dollars. You have other clients too and they keep you solvent, but this federal contract keeps you afloat. Now consider this: you have not run a pay equity analysis in a few years. As such, one of your mid-level employees has just had a compensation discussion with their boss that turned ugly and in return alerts both OFCCP and DOL of discriminatory compensation actions. You (HR) receive a notice from DOL asking for your entire compensation history for the past three years. Their review of females and minorities corroborate the narrative supplied by your employee- which leads to an onsite audit. Over the course of a year, they find there are plentiful pay equity violations that result in a fine of $700,000. Ouch! Fines of this magnitude can sink a business or at a minimum leave an indelible wound.

Do you remember the Astra-Zeneca DOL Settlement of 2011? Women were found to make at least $1,700 less than their male counterparts doing the same job at AZ. 124 women were awarded a $250,000 settlement. In return, AZ promised to review pay practices and fix any problems.

Could Self-Audits have helped Astra-Zeneca?

Yes. Had they been reviewing their compensation policies and practices regularly they would have seen issues warranting attention and revision before this became a class-action lawsuit. Self-auditing or mock audits can save you and the company from hefty fines, awkward conversations and/or having to close your doors.

Here are some tips on implementing self-auditing as a practice:

  • Depending on how often you can expect to be audited by outside agencies, set up an internal audit schedule.
  • Create an internal audit team to review your practice against your policy and procedures. Where possible, it is ideal to have someone outside the group being audited conduct the audit for objectivity purposes and for a fresh pair of eyes.
  • Summarize findings and create a threats and opportunities analysis to see where you need to improve. “Threats’ in this context would be items that are inconsistent with your policy and violate the law. “Opportunities” are areas where you do well in complying with policy, but there is potential for violating the law.
  • Get your team involved. Ask them to conduct their own random spot checks. This holds everyone accountable for the consistency of following procedure and allows you to get ahead of potential issues.
  • Train your team on communication during an audit. Saying the wrong thing or too much during an audit can be detrimental your success. Ensuring that each of your team members understands what to expect and how to respond can be helpful for when they are faced with a real auditor.

When it comes to your business, ignorance isn’t bliss. Don’t be afraid to self-audit. It is far better for you or your peers internally to point out your faults than any regulatory agency. Become informed about where your fall short and tighten up your practices. You will thank yourself and the executive team will thank you for saving their money.

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