GREAT 143 IDEA: Perform a Personnel Checkup
You get regular medical and dental checkups, right? So how about giving your business a personnel checkup? The reason: Every year, thousands of unhappily terminated employees sue their former employers. Their complaints, justified or not, cost small business owners millions of dollars in legal fees, emotional distress, and lost productivity.
There are so many complex regulations on the books that it's tough to keep up.
As her fast-growing public relations firm approached 50 employees, Ellen LaNicca, former president and cofounder of Patrice Tanaka & Co., felt she needed expert help. Many state and federal employee regulations kick in at the 50-employee level, and she wanted to be sure she was in full compliance.
LaNicca turned to Peter Skeie, an attorney and cofounder of The Personnel Department Inc., to sort through the morass of laws she had to deal with. Skeie and his colleague, Craig Chatfield, left their jobs at Fortune 500 companies to set up their own human resources consulting service in New York City. (They've since closed the company, but Chatfield has a new firm: http://hrinnovations.us.)
How to Evaluate Your Hiring and Firing Policies
- Consult with an experienced labor lawyer. Ask him or her to review your job application to make sure it doesn't violate any state or federal employment laws. (For example, you can't ask a job candidate how old they are or whether they have kids.)
- Ask them to explain the steps and documentation required before you can legally terminate an employee.
- Create an employee handbook and a policy manual. Your policy manual should outline everything from the dress code to employee benefits and vacation days. Be as specific as possible to avoid confusion.
- You can buy software to create these documents or find an online solution.
- Circulate copies to everyone and require employees to acknowledge, in writing, that they have read them.
- Distribute a written policy prohibiting sexual harassment at your company. Make sure all employees read and sign a copy of the memo.
- Encourage your employees to suggest ways to boost morale and improve communication with new policies or changes to existing ones.
“Peter was part diplomat, part human resources legal counsel, and part troubleshooter,” said LaNicca. “He helped us through the process of restructuring jobs and creating separation packages for employees being let go.”
Skeie helped LaNicca review all the company's personnel practices, including revising the employee policy manual and job applications. “From the beginning, we wanted to have the best working environment possible,” said LaNicca. In addition to providing traditional medical benefits and flexible scheduling, the firm has a meditation room to help employees “destress.”
Skeie said most small businesses aren't as employee friendly as LaNicca's, but they all face similar people problems. “We realized small companies have the same employment liability as Fortune 500 companies,” said Skeie. “Failure to document problems as they occur is at the top of the list,” said Skeie. “It's much better to take a half-hour and document (in writing) employee problems because if you don't write them down, it's much harder to defend yourself later in court.”
He said too many small business owners tolerate high levels of poor performance from employees because they don't know what to do. “Eventually, a straw breaks the camel's back, and they fire the person,” said Skeie. “But then they get sued because this person, who has become accustomed to doing virtually nothing, gets fired and wants revenge.”
Remember, not knowing labor law is no defense when an employer gets sued by an irate former employee.
“Another mistake made by business owners is having incomplete policies and procedures,” said Skeie. “You can get in trouble if it can be proved there's been a lack of attention to employment-related issues.”
Plain management misconduct is another serious problem. “Employers make stupid but innocent mistakes,” he said. “They probably don't mean anything discriminatory by asking whether you are going to get married and have children, but it's against the law.”