Human Resource ROI

Human Resources is generally an overlooked part of small businesses but is a critical part of the company.  Human resource functions are generally associated with hiring/firing, employee retention and compliance.  All these functions are vital to the success of a business to create a productive workforce while protecting the company from employee lawsuits, unemployment and workers’ compensation claims.

The biggest function for an HR department is recruiting and retention of employees.  Having the right workforce is critical to the success of a business.  So how do we track the ROI of this process?  Very simply, look at the effectiveness of who is hired.  Do they fit the skills of the position and the “personality” of the company?  How effective are they in their job?  How much turnover does the company have?  While recruiting the right people is the first step, retention of employees is a key to positive ROI.  As mentioned in a previous article.  Studies have shown that turnover can cost 2-3 times of the employee's salary, so a lot of money can be wasted on a bad hire.  But retention goes beyond hiring the right person.  The right person can leave the company because of other reasons such as inadequate pay, lack of benefits or not feeling engaged by the company.  These are the top reasons employees have given as reasons to part ways with their employer.  It is the Human Resources’ responsibility to be in tune with the wages and benefits that are being offered by similar companies.  HR also plays are vital role in engagement by creating effective on-boarding procedures.

Lastly, HR can protect you from various liability concerns.  Whether it be unemployment, workers’ compensation claims, lawsuits or compliance penalties, comprehensive HR guidelines and procedures can greatly limit your liability.  There are many do’s and don’ts when it comes to having employees that most small businesses are not aware of or overlook.  This can be quite costly in the long run because it opens your company to a lot of risk.  Employee handbooks, job descriptions, workers’ compensation procedures, employee reviews and warnings are just a few of the things a strong HR department can use to limit liability.

Most small businesses have a very small HR department, if any.  Having a strong HR presence within your company whether it be in-house or a consultant can be a great ROI.  The old adage “you are only as good as the people who work for you” is the primary focus of Human Resources.

Orientation & Onboarding - Setting the Tone for New Employees

Orientation and Onboarding are key components for setting the tone for new employees.  Well-constructed programs can reduce turnover and create a positive company culture.  Each employee should be provided with same orientation and onboarding process with the exception of work responsibilities for different positions.

Orientation is the initial process to provide details on the expectations of the employee, details of their position and company policies and procedures.  A staff member will go over things such as employee handbook information, tour of facility and introduce employee to other staff.  While many orientation programs fall heavily on company identity, studies show that orientation programs that focus on the individual are more successful.  Orientation should focus on how the employee contributes and fits into the overall focus of the company.  The employee should know they are a valued member of the team as opposed to an employee in the company.

Onboarding is the process where employees on acquire the necessary knowledge, skills and behavior expected as part of their position.  Companies may use job shadowing, manuals, lectures, videos, computer-based learning for onboarding employees.  Research shows onboarding processes that focus on personal attention create more efficiency and productivity.  Some skilled positions may require more hands-on training than others.  Onboarding process should not only be for new hires but are effective for an employee who switches positions within the company.

Orientation and Onboarding programs should be well-defined and followed with each new hire.  Employees are more productive and dedicated if they feel a part of a company rather just an employee. 

Employee Handbooks

"Was it in your Employee Handbook?"  For those of us who have been part of unemployment hearings, we have heard this phrase many times.   When the answer is "no", the case is generally closed.  While Employee Handbooks can help you against unemployment claims, it is much more than that and vital to your organization.

Employee Handbooks are an important communication tool between you and your employees.  Every employee receives the same information so handbooks should be well thought out and contain all aspects of the employer/employee relationship.  It sets the tone for the employee's future with your company by providing information, expectations and guidelines for all of your employees.

Employee Handbooks should include Company History / Mission Statement, Compensation & Benefits, Job Descriptions, Employee Conduct Policies, Workers Compensation Policies, Time & Attendance Policies and Human Resource Laws (i.e. EOE & FMLA).  Handbooks should also include pertinent company information, industry information and other state regulations and guidelines.

Because an employee handbook sets the tone for your employee, it should not be a cookie-cutter type document.  While it will have need for "legal-speak" in some areas, your tone for your handbook should be positive and in plain terms.  It should engage your employees as an overall part of the working relationship.  The handbook should just be one part of your company's "engagement" with your employees.

Employee Handbooks have to be distributed and understood by all employees.  Companies should review the material with each employee to make sure they are aware of all policies and understand them.  Once the handbook is put in place, all things contained in it must be adhered to by every employee for it to have any significance.