EDITOR'S COLUMN: MANAGING THE SECOND-GREATEST RISK AT YOUR COMPANY

The greatest risk any business, including yours, faces is lack of proper sales and marketing. With today’s commoditization of products and services, it’s the experience that tends to matter most. Those companies that produce the best sales and marketing experience will usually be the most profitable. That’s why roughly half of all training dollars go for sales and marketing training. If one salesperson outsells another one 2 to 1, you have a 100% variance. That’s a good reason to spend money on sales training. The remaining training dollars go toward everything else: From operations, technology, customer service, finances, to -- you guessed it -- HR!

The second greatest risk your company faces is not having quality HR practices. Most companies have randomized ones. Do you? Anytime I’ve run the HR That Works Cost Calculator for a client, the “variance,” cost, or risk associated with the company’s HR practices come to at least 10% of payroll. This figure combines a company’s hiring practices, employee productivity, turnover, teamwork, time management, safety record, employment practice exposures, and other factors. When you think about it, the only other area of your business with this high a variance might be customer service. This means that sales, marketing, human resources, and customer service have the greatest variance within an organization – and, thus, the greatest amount of risk. Unfortunately, few businesses can insure themselves against these risks. It’s Darwinism at its best.

If any other part of your business had a 10% or greater variance, you’d be in a heap of trouble. If you have a 10% variance in how you manage your financial books, you’d probably be in jail. A 10% variance in product quality would mean you’d be facing liability suits regularly. A 10% variance in how you deliver your professional services would lead to a high frequency of E&O claims.

I’ll be the first to admit that HR isn’t sexy. However, my point is that it can be and should be! Sales and marketing is all about “them.” HR is about “us” – about who we are as human beings, not just human resources. I’m amazed that more HR professionals don’t take greater advantage of the HR opportunity. Perhaps you’re primarily engaged in administrative or financial functions and have been handed the HR role. That’s awesome. If you don’t like the idea of HR, then call it something else, such as the “People Excitement” role. Call it whatever will work. However, don’t underestimate the opportunity you’ve been handed.

One of the roles of HR is to make sure that our employees are promise keepers. They have to live up to the promises our sales and marketing communications make. Ultimately, the sales and marketing promise means delivering great client or customer experiences. That’s what matters now more than anything else. How can you, as an HR manager, help employees deliver great customer experiences?

If neither you nor nobody else in the company wants to jump on this opportunity, hire somebody part-time to help you do it. Think about it this way: How would you like to have poor hiring practices, high employee turnover, low productivity, poor teamwork, lousy training, high Workers Comp and Employment Practices claims, misuse of benefits — and a ton of unnecessary and expensive and destructive drama? All of a sudden, having good HR practices doesn’t seem like such a bad idea.

What’s most important is what needs to be done now. Where’s the stress in your organization? What feels unfair to people? We can certainly try to help eliminate some of the victimization in the workplace. At the same time, we have to ask, “What’s going exceptionally well?” How can we support getting twice of that? How can this provide a model for other departments or functions?

The unfortunate truth is that most people who wear the HR hat in small to mid-sized companies aren’t really excited about their job; in a sense, they got the job by default. Chances are that they didn’t say, “I can’t wait to get a hold of this and kick you know what!” Let’s hope that you or your HR manager isn’t that kind of person. Don’t give up on trying to make a difference just yet. Focus on the value to help generate greater productivity, profitability, and joy on a daily basis. Focus on the potential that exploiting such an opportunity can provide, not just for the company, but for the manager’s career and well-being.

How can you start being this person if you wear the HR hat? My answer: Begin by doing at least one proactive thing every month to improve some part of the HR function. Don’t have a narrow view of what HR can stand for. It’s not just about payroll, benefits administration, and making sure that you’re compliant. It’s about tapping into people’s heads and hearts so that you can create something special together. There are plenty of tools on HR That Works to support you on this journey. Begin to educate yourself by reading the newsletter or listening to podcasts, and then you tackle one proactive strategy a month. Take a look at the HR Implementation Plan to give you some great ideas. Do this for a year and you’ll be able to look back and be proud of the body of work you’ve generated. Also, make sure to report to ownership or management the strategy you’ve developed and how it will impact the company (a one-page memo will suffice). Here are 10 quick steps you can take to start making a difference today:

  1. Make sure your employee handbook is up to date. Have an attorney review it. Then bring it to life. To see the sample employee handbook we did for the San Gabriel YMCA, click here. Now that’s an awesome employee handbook!
  2. Skill-test all your employees. Go to www.Previsor.com to see what test(s) they offer for each one of your positions. The cost will probably come to $20 to $50 or per employee – an investment that’s more than worth it. The test results will give you facts, rather than assumptions, letting you know which employees have the skill sets and which need some training.
  3. Make sure everyone –managers and rank-and-file employees alike – has gone through sexual harassment training. They need to know the company’s policy and acknowledge it annually. When I spoke to a CEO group recently, one of the participants told me that her company had just settled a sexual harassment case that she felt was frivolous for $350,000! Fortunately, the company had Employment Practices Liability Insurance, which offset much of the settlement cost. HR That Works offers a variety of lawsuit prevention tools and training.
  4. Create your team rules. Look at the sample Team Rules template on HR That Works and tweak it to work for your company. Make the rules something in which you can take pride. Once you finalize it, go down to Kinko’s, have it blown up and laminated, and then have all your employees sign it so that they can walk by and have an attachment to it every day.
  5. Require use of the Overtime Authorization Form. One of our printing press clients with 80 employees saved roughly $100,000 in one year by using it. “Unwarranted” overtime fell by $5,000 the first month they used the form – a $60,000 annual saving. Next, the company analyzed those clients who were causing “legitimate” overtime and realized that it wasn’t passing along this added expense to them – which meant that the firm was barely breaking even or losing money on these jobs. They let their clients know about the costs of last-minute demands and told them they would charge them a premium in the future. The company sent clients who didn’t want to go along with this program off to its competitors. Finally, to minimize overtime stemming from poor internal practices, the company applied TQM to these activities.
  6. Set up a lunch-and-learn program (preferably monthly) for your management team. Use these programs to do “workshops” in which you set a theme, present a challenge, and work as a team to come up with some solutions. Other meetings can focus on a learning mode. Watch one of the excellent HR That Works leadership Webinars — any one of them will suffice as a start. Most managers outside of the sales arena get very little training, perhaps because businesses are concerned about its time and cost. If you have employees who are classified as exempt, you’re certainly allowed to have them eat a healthy lunch and hold a one-hour training session or workshop. You might get so excited about the idea that you even start doing these on a bi-weekly basis.
  7. Join a “mastermind group” with other HR executives. These groups support each other, challenge each other, and put your feet to the fire. All the successful executives I know are in mastermind groups. I ran a group for senior HR executives because they realized that had a personal need for it. If you’re an HR That Works Member and would like to start such a group, e-mail me, and I’d be happy to send you a whole protocol and process that will help you get started.
  8. Distribute the Employee Compliance Survey. This is the single most powerful compliance form ever designed. Plaintiff’s lawyers don’t want you using it because it can cut the amount of employment law litigation in half. Because I no longer litigate, I have no qualms about making sure you use this powerful document. I don’t know of a single company using this tool that has suffered an employment verdict. An attorney from Tennessee told me that his client had won a summary judgment using the form; I also had a call from a company in Fort Lauderdale who said that after employees wrote “Fifth Amendment” across the form they did an investigation and found a serious sexual harassment situation that was about to evolve into an employee lawsuit. I would suggest distributing the form twice a year.
  9. Run your numbers in the HR That Works Cost Calculator by clicking here. I’d encourage you to watch my explanatory video first. These numbers will help you identify your HR story from a bottom-line perspective, and provide all the ammunition you need to liberate some of your time so you can do a better job of working on HR – not just in HR.
  10. Survey your management team by using the HR Department Survey. Don’t guess at what types of support the rest of the management team needs from HR. Survey them to find out. I find that in companies where HR is not strategic in nature, it will receive good scores for payroll and benefits administration and low scores for hiring, performance management, or training.

Conclusion: Those are a handful of ideas to help get moving on doing something with this opportunity. There’s magic in doing one of them today!

Need insurance for You, Your Family or Your Business?
We can match you to a qualified, local insurance expert!
Further Reading
Here's what HR professionals are told to worry about most: FMLA, ADA, EEOC, DOL, OSHA, NLRB, FLSA, OFCCP, GINA, HIPAA, COBRA, Title VII, etc. Discipline, termination, layoffs, bullies, violence, EPLI, etc. Protecting ourselves fro...
I remember my wife and I going to a parenting class and learning the mantra, “firm, but fair.” It's okay to have clear rules in your household and enforce them; however, you want to do so in a fair manner. When we’re clear about the rules, we can be ...
In a case brought by the EEOC against the Fairbrook Medical Clinic, the plaintiff, Dr. Deborah Waechter, alleged four years of harassment by the sole owner of the family medical center in Hickory, NC. Apparently, the owner created a hostile work en...
Much what much of what gets in the way of success is… ourselves. Here a five emotional traps we should strive to avoid: 1. The desire to be comfortable – as Paulo Coelho said “only the mediocre are ever truly comfortable". If your primary goal i...
I recently went through an excellent session using the ZeroRisk HR assessment to help me become a better manager of my own employees. One of the most insightful things I learned was to distinguish when to direct employees, when to coach them, or w...