Don’t Just Rebuild Your HR Practice – Rethink It

A lot of traditional Human Resources departments are having a hard time these days. The standard model of a team of in-house practitioners – or, in the case of smaller companies, a single specialist – is being challenged by mounting demands on all sides. Companies insist on greater efficiency and accountability; employees look for expanded services and more one-on-one assistance with HR issues; and external entities ranging from government regulators to contracting firms are demanding more time, paperwork, and effort.

In most cases, that means that something’s got to give; an HR lead takes the rap for missteps, while the practice succumbs to cost reduction measures, and ultimately operates with diminished efficacy even as the demands upon it mount in intensity and urgency. In a lot of cases, that culminates in an inevitable reshuffling of positions, responsibilities and personnel that fails to address the underlying issue: To perform optimally, modern HR demands a level of expertise, manpower and investment that most companies just can’t provide.

What’s needed isn’t necessarily a new team lead, new titles or new personnel in the seats – it’s a new approach. Peak-performing HR, in 21st century terms, is more than masses of representatives tucked into a basement office cubicle farm – it’s the ability to deploy focused, task-specific expert talent when and where it’s needed, with the ability to “dial back” as appropriate or refocus resources elsewhere when necessary. That typically isn’t possible in a traditional HR practice operating with fixed staffing, infrastructure, and tool sets.

These are the conditions that have led to the emergence of the modern-day PEO. The need for an agile, responsive HR practice armed with the infrastructure, skill set, and expert personnel capable of effectively handling the full scope of current HR responsibilities makes a cosourced or outsourced HR solution increasingly valuable. Rather than remaining tied to a rigid and unresponsive internal practice or a seemingly endless cycle of expensive and risk-prone HR reorganizations, more and more companies are opting to forego hiring new HR leadership and bringing on a PEO or HR administration partner instead.

A qualified, professional PEO is capable of providing a level of focus, knowledge, and institutional strength to HR capabilities that even the best practices – and practice leaders – can seldom match. Today’s HR is an expansive and ever-changing endeavor, and it takes a relentless focus on remaining current with best practices, regulations, and needs in order to be effective. While that focus is part and parcel of a good PEO’s normal activities, it is unnecessarily time- and capital-intensive for an internal practice. When it is possible for a partner organization to provide high-quality services tailored to a company’s specific requirements, and to do so within a flexible framework that responds to fit changing needs, it makes less sense to stick with a problematic traditional model.

Effectively, a company’s implementation of a PEO or HR cosourcing strategy amounts to an offloading of risks, responsibilities, and costs associated with activities it has no real interest in being involved in – HR is not a profit center. Partnering with a capable PEO enables a company to refocus upon its core business and profit-generating activities, aligning operations to deliver optimal business results. In today’s hypercompetitive environment, that can be a distinct advantage; a timely rethink of a company’s approach to HR – and the willingness to change fundamental approaches – can result in not only a high-performing HR function, but a high-performing business.

The “Full Employment” Paradox: Employee Retention Becomes A Bigger Problem for SMEs

According to current economic statistics, the United States is finally edging back towards that elusive condition known as “full employment” – that is, a sustainable unemployment rate of 4% or lower. Job numbers are increasing, the economy is fundamentally stable and sound. As counterintuitive as it may seem, these conditions actually pose significant hazards to many companies, particularly smaller businesses.

Why? A tight labor market provides fewer choices for employers, while increasing opportunities for workers. Employees looking to jump ship have a wider range of potential new employers to choose from; the companies they leave behind are faced with a diminished range of candidates to replace them, as well as the need to invest more time and effort to identify successful recruits.

Some attrition is inevitable, even in the tightest job markets. It is also expensive: Apart from the costs associated with training and onboarding, companies need to consider the hidden costs of diminished productivity during transitions, loss of expertise and institutional knowledge, and the potential impact of churn on employee morale.

When the prospect of easily recruiting replacements dims, employee retention becomes more important than ever; the problem is that many of the most effective strategies are especially costly, and sometimes unavailable, to smaller businesses. While raising pay is one way to get employees to stick around, other retention measures can be just as effective and less expensive, if companies can take advantage of them.

Employees consider a number of factors beyond pay when deciding whether to stay or go – and often, employers can influence a surprising number of them. These can include:

All are factors in determining the single metric that determines whether an employee sticks with you or not: Job Satisfaction. The higher a worker’s job satisfaction is, the less likely they are to look for greener pastures – and the less likely you are to have to deal with the hassle of finding a replacement.

At Trion Solutions, we consider it an important part of our job to optimize job satisfaction to the greatest degree possible. Over the course of countless engagements, we’ve seen firsthand how providing first-class HR services to rank-and-file employees as well as client firms can have a powerful positive impact on employee morale.

As you might expect, providing a quality benefits package is a big part of that equation: Workers care more about a company that cares about them, and which shows it by making good health coverage, life insurance, 401(k) plans available. But other HR services are also powerful drivers of job satisfaction as well. Improvements to communications, provision of clear and concise employee manuals, professional handling of payroll issues, clearly defined policies and procedures, improved training programs and other improvements to worker-facing HR activities always have a favorable effect on how employees perceive a company – and how loyal they are to it.

Even historically high-turnover industries can benefit greatly from instituting optimized, systematic HR practices and implementing tailored benefit programs – and often they can do it more quickly and effectively by working with a PEO. Rather than a piecemeal rework of an existing system or an effort to develop a truly first-class practice from scratch, engaging a PEO provides a company with the immediate benefits of proven programs and practices that have been optimized elsewhere. While the transition may be generally transparent to employees, the aggregate benefits seldom are. That translates into a clear employee retention advantage in an option-rich job market.

If you haven’t considered job satisfaction in your company lately, maybe you should: There’s only so much top-tier talent around – and any company will do well to hang on to as much of it as possible.

Trion helps companies of all sizes to institute powerful employee retention strategies. To learn more about how we can help you, contact us.

 

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What’s a PEO – and Who Needs to Know?

In the world of business, some changes get all the attention. A new law, a new technology, a fundamental change in the economy or in the marketplace will quickly command the attention of boardrooms and the business press alike – and understandably so. The ripple effects of such changes usually create significant effects that are still felt months or years later. Even more significant changes, though, often happen almost completely “under the radar,” even though they may upend whole industries or the entire business landscape.

One such example is the ascendance of the Professional Employer Organization or PEO.

In recent years, PEOs have staked out a claim to a growing portion of the HR field, supplementing or eclipsing in-house Human Resources departments in many small to mid-sized companies. Nonetheless, they remain dimly understood by many of the business owners best positioned to benefit from their services, even as they are fundamentally changing the way American business manages interactions between employers and employees.

In essence, a PEO exists as a separate, stand-alone organization focused exclusively on managing its’ clients’ human resource-related functions, including benefits administration, regulatory compliance, workers’ compensation, payroll, taxes and similar practice areas. A PEO will assume the role of “employer of record” for a company’s employees, taking on the responsibility of administering most or all of the administrative tasks – as well as a fair measure of the risk – associated with maintaining a workforce.

In doing so, client businesses gain a number of significant operational and competitive advantages:

The growing popularity of the PEO model is driven to a great degree by the increasing challenges and stressors facing small to medium-sized businesses. An increasingly technology-driven, global marketplace heightens competition and shrinks margins, even as increased regulatory and legal risks impose additional complexity and costs upon HR departments and practitioners. A PEO can deflect risk, contain costs, ensure consistency and predictability in practices, and effectively address complex taxation, insurance, and regulatory issues becomes increasingly valuable to companies operating within this challenging environment.

Few expect the business climate to become less complex or challenging in the years to come. As the burdens of regulation, competition, and costs continue to exert pressure on businesses, the ability of PEOs to buffer their clients from their effects will likely come to be perceived as a distinct competitive advantage – and not only knowing what a PEO is, but having one in hand, may make a critical difference in business success.

When Discussing Employee Performance, Stick To The Facts

Virtually all employers know that workplace communications can be a minefield. It’s always vital to maintain clear channels of communication and shared understanding between personnel at all levels of an organization. At best, failure to do so stands to impact efficiency and morale; at worst, it can result in costly legal ramifications, damage to a company’s brand, and disruption of operations.

This is especially true when it comes to communications surrounding employee performance and disciplinary measures. Federal and State laws both provide multiple levels of protection for employees claiming unfair discipline or dismissal, particularly if on grounds of discrimination. In the event that a dispute results in litigation, it can safely be assumed that the employer will face a significant burden of proof in demonstrating that it has treated the complainant fairly and equitably – and that’s the point at which earlier communications can potentially torpedo an effective defense.

A recent discrimination lawsuit filed by an employee discharged for performance reasons provides an excellent case in point. As reported in HR Morning, three vaguely phrased words uttered by the company’s CEO in the course of a meeting with the disgruntled employee were sufficient to allow the suit to advance, necessitating a costly and prolonged legal defense. In addition to documented performance problems and issues surrounding execution of job duties, the CEO cited “too much drama” surrounding the employee as part of the grounds for dismissal.

So what’s the problem? Subjectivity. “Too much drama” may seem like a statement of fact in the context of a discussion between people equally familiar with the circumstances being described. To a plaintiff’s lawyer, though, it is clearly an opinion – and would likely appear the same to a regulatory board member or a judge. In all likelihood, the CEO simply used the phrase as shorthand to describe a number of related events that both the company and the employee were well aware of; to an outside observer, though, the phrase smacks of the sort of vague, subjective complaint likely to be arbitrarily or unequally applied to employees targeted for discipline or dismissal – and thus an invitation to a potential lawsuit.

In the heat of a conflict situation, it is only human for managers and employees alike to fall prey to sloppy phrasings such as this. “Only human” impulses, though, are what companies need to guard against. The solution is to be factual, specific, and precise in all communications related to an employee’s performance, or lack thereof. Had this CEO chosen to enumerate the instances of the “drama” he was referring to – “Employee X was involved in conflicts with other employees Y times within a Z-month period” – it is doubtful that the discharged employee would have had grounds to proceed with a suit.

A solid defense against a discrimination, harassment or wrongful dismissal challenge hinges upon an employer’s ability to demonstrate that the decision to discipline or terminate an employee was based on objective, fact-based decisions. However fair the evaluation or disciplinary process may have been, imprecise or subjective language only serves to undercut an employer’s position – and open up a world of unnecessary, avoidable pain for the company.

Observe National Ladder Safety Month With These Tips

March is National Ladder Safety Month, an opportunity to review your policies, training, and equipment.

Whether you’re a small service business with a couple of step stools around for lightbulb changes or a large contractor that uses complex climbing equipment, you’ll want to read on for the latest on ladders.

According to OSHA, falls from portable ladders (step-, straight, combination, and extension) are one of the leading causes of occupational fatalities and injuries. Here’s a basic overview of what’s required for all ladders.

 

Additional OSHA requirements:

STRONG JANUARY JOB NUMBERS ARE GOOD NEWS – BUT HAZARDS LIE AHEAD

Most economists were surprised, and pleasantly so, by the Bureau of Labor Statistics’ January job numbers. According to the Bureau as reported by Business Insider, the U.S. Economy added 227,000 jobs during the month, beating expectations by 47,000 jobs. This robust performance continued a record-setting 75 consecutive months of job gains. At the same time, the Bureau reported that wage growth remained contained, gaining only 2.5% year over year, two-tenths of a percent below expectations.

While as the saying goes, “all good things must come to an end,” there is no immediate signal that January’s gains are likely to be the last of their kind. Nonetheless, companies would be well advised to keep an eye on several factors which stand to impact job growth and overall economic health. These include:

Consumer sentiment. According to Business Insider, positive post-election consumer sentiment likely fueled many of January’s gains. Positive sentiments may be placed at risk in the wake of post-inauguration unease; the rocky period for public sentiment following the inauguration could impact consumer confidence and purchasing in the months to come.

Problems in the energy sector. A recent report in Forbes noted geographic disparity in job growth. Hit especially hard are many of the northern plains states – Montana, North Dakota, and Wyoming – which have been adversely impacted by falling oil prices and consequent declines in the region’s fracking-based extraction industry.

International trade turmoil. Previous positive projections for strong economic and employment growth have been based in part on anticipated strength in international trade. That rosy picture is called into question somewhat with the announced U.S. withdrawal from the Trans-Pacific Partnership trade agreement and the threat to renegotiate or withdraw from the NAFTA agreement would stand to drive up prices and diminish markets for US exports.

ACA repeal. Campaign rhetoric notwithstanding, there is no assurance that the Affordable Care Act will be repealed in the near term. Nonetheless, it is likely that the Act’s days are numbered, and economists are forecasting significant employment fallout as a result: Fortune magazine cites over 1 million likely job losses, with other sources citing even larger figures.

On the positive side, companies are likely to benefit from any changes in U.S. employment law. The new administration is already indicating that it will roll back recent expansions of overtime eligibility, and has demonstrated opposition to minimum wage hikes, both of which are likely to please business leaders.

All conjecture aside, one certainty is that US government policy, the US economy and the tone of international relations are both in a state of transition – and that spells uncertainty for business and for the employment picture ahead. While the Bureau of Labor Statistics and the majority of economists currently seem to remain optimistic about 2017’s overall employment and economic prospects, we believe it’s wise to remain flexible and adaptable in light of the number of factors likely to exert an influence. As always, Trion will monitor emerging trends and developments in order to keep our clients informed.

The Business Value of Flu Prevention

The flu is nobody’s friend, as anyone who has fallen prey to this annual menace will tell you. Fever, aches, nausea and general debilitation are bad enough to deal with – but there is an economic and business cost as well as general misery.

That cost is considerable. According to the Centers for Disease Control, between five and 20 percent of the U.S. population falls prey to the flu each year; tens of thousands are hospitalized, and thousands die from its effects. The direct medical costs come in at over $10 billion; $16.3 billion are consumed in lost earnings. For companies faced with the absence of critical employees and flu-related loss of productivity, the real cost can be incalculable.

In the case of an individual business, the ramifications of employee illness are fairly easy to foresee: An employee who is absent due to illness is not doing their job, and the work either falls on others’ shoulders – thus impeding their own work, and compromising efficiency – or it doesn’t get done at all. In cases where the illness spreads, the result is multiple absences, and an exponential magnification of this effect. The logical conclusion: Investing in workplace flu prevention measures isn’t just a compassionate gesture towards employees; it’s good business.

So what can you do to help keep employees healthy during flu season? Start by establishing common-sense guidelines and practices for tackling the flu head on:

Don’t let the flu put a dent in your productivity or profitability this season. Taking a few simple steps like these can go a long way towards keeping your company and employees flu-free.

For more information, download our “Flu-Free Workplace” newsletter here.

 

Dodging the Hazards of Out-Of-State Expansion

 

For many successful local businesses, it’s an idea that seems enormously appealing: Build your company by establishing a beachhead in neighboring states. It makes perfect sense on the face of it: If a product or service is a market success in Michigan, for example, it stands to reason that it will fare well in Indiana or Ohio. And there’s seldom a reason why a restaurant chain that’s popular in Florida would fail to gain traction in Georgia.

It makes perfect logical sense – but business is not always logical, particularly not when government regulation is involved. While market conditions may be nearly identical from one state to the next, regulatory and taxation environments usually are not – and those differences can go a long way towards torpedoing the success of an expansion effort, often almost as soon as it begins.

As is often the case when it comes to the hazards facing growing businesses, the biggest problems are caused by the issues you don’t know exist and the hazards you can’t see coming. Unless your company is already a major corporation with an established presence —and on-the-ground expertise—in other states, it is a virtual impossibility that you’ll be fully aware of all of the potentially problematic differences between your new place of business and your home base. That’s a problem.

Taxation and regulation are the first and most obvious pitfalls. Tax and regulatory codes naturally differ from one state to the next; each state has its own centuries-long index of whys and wherefores that have come to constitute its current-day regulatory and taxation environment. In virtually all cases, these are the cumulative end product of decades of capricious governance: Local and state officials, acting in self-interest or in the interest of special interests, enact a welter of tax and regulatory burdens that remain on the books for years and which usually multiply their reach and impact exponentially over time, creating an impenetrable tangle for businesses to wade through. Income tax, sales tax, property tax, workers’ comp, health and safety, environmental issues – the list of distinct areas potentially affecting a would-be new business are endless.

These are sizeable problems in and of themselves – but they are not the only consideration. Laws and regulations don’t exist in a vacuum; rather, they function within the unique local political, legal and social framework. In practical terms, Ohio doesn’t function identically to Michigan, nor Atlanta to Orlando. Each state, county and municipality is subject to its own localized customs, power structures, and idiosyncrasies. Even when a company operates fully within the letter of the law, capricious local officials and arcane provincial practices can draw new businesses into the regulatory quicksand.

Knowing both what and who you need to know to sidestep these pitfalls is essential – and that’s where Trion has proven its worth to many of our growing clients. As an established national PEO with a solid on-the-ground presence and a wealth of localized institutional expertise, we’re able to navigate the payroll tax and regulatory minefields wherever there’s business to be done – and we shield our clients from costly, time-consuming entanglements with local compliance authorities. Clients usually come to us to handle the routine daily hassles that they know and expect, but we often deliver much of our value in dealing with the ones they don’t expect. As many of them will tell you, that can make a big difference – often between success and failure where out-of-state expansions are concerned.

 

New Overtime Rules Spell Big Challenges For Business

Statistics show that the median salary increase in the US is a rather moderate 3.1% thus far in 2016, but that doesn’t mean that the cost of labor isn’t about to go up for many businesses—way up.

New regulations issued by the U.S. Department of Labor stand to make potentially millions of previously-exempt workers eligible for overtime pay. Personnel previously classed as exempt executive, administrative, and professional (EAP) employees now may qualify for overtime if the terms of their employment don’t meet increasingly stringent requirements.

Perhaps most notably, the salary level at which EAP employees may become exempt from overtime has effectively doubled, jumping from $455 to $913 per week (or from $23,660 to $47,476 annually). In practice, that means that, for example, a midlevel restaurant manager earning a salary in the mid-thirties and working a few hours above the statutory 40 per week just might be about to become quite a bit more costly.

The Department of Labor (DOL) has issued its Final Rule for new overtime exemptions, focusing on the “white collar” exemptions (executive, administrative, professional, and certain computer employees. These new rules will:

Misclassification of salaried-exempt employees is among the fastest growing civil actions in both federal and state courts. With the final rule, the incentive for employees (and/or the DOL) to claim misclassification has increased. We advise clients to begin assessing whether they wish to pay the higher salaries and/or take other measures. We also advise them to review the duties of their employees that are or may be classified as salaried-exempt to ensure that they meet the various duties tests for the white collar exemptions.

The rules’ applicability is extensive: The DOL estimates that 4.2 million currently exempt workers will become eligible for overtime. In addition, overtime protections will be extended for an additional 5.7 million white collar and 3.2 million blue collar workers.

The new regulations’ effect will be profound on many small- to medium-sized businesses, particularly in areas where prevailing compensation levels fall at or below national averages. Employers will have to wrestle with whether to cut hours, reassign work, increase wages, or simply pay overtime to eligible employees.

Despite the stated intention to simplify both the overtime eligibility rules, the newly-issued rules remain highly complex. The new DOL regulations take effect on December 1, 2016. In the meantime, Trion will assist its clients in adapting to a greatly changed overtime landscape – and implementing strategies to help ensure compliance within it.

 

The Challenge of Seasonal Employees

As the seasons change, many people start to think about vacations and maybe taking things a little easier. For anyone involved in hiring and managing seasonal employees, though, that’s the time that things heat up in more ways than one.

Agricultural concerns, hotels, restaurants, resorts, theme parks, golf courses and a host of other industries depend on a high volume of seasonal labor, most of which must be recruited, on-boarded, trained and deployed anew each year, only to be offloaded a few months later. For managers, recruiters, and in-house HR personnel, it is usually a tiresome, time-consuming and costly annual ritual that becomes a little bit more difficult each year: Changes in local, state, and federal regulations and tax law, in particular, must be reviewed and accommodated. In many cases, the costs of recruitment continually rise, even as the available pool of credible, qualified recruits diminishes. That puts dents in productivity, profitability, and efficiency.

Each new, unproven seasonal employee also poses some significant risks: at the time of hire, ethics and performance are unknowns. To mitigate these effects, companies can be tempted to limit – or eliminate – seasonal staff, or to keep on employees on the payroll after their utility has passed. While a measure of risk may be averted, it’s a virtual certainty that business performance is compromised.

For PEOs, the challenge of seasonal employees is an opportunity to shine. It makes perfect sense: The HR tasks that most companies struggle with are a matter of daily routine to a well-run, high-functioning PEO, and there is little difficulty in administering them for seasonal personnel. As in other industries, HR processes can be managed much more expeditiously and economically by a good PEO.

More and more companies are becoming aware of the PEO’s utility in minimizing the pain of seasonal employment. In particular, the hospitality and resort industries are proving to be especially fertile ground for PEO growth. At Trion, we’ve witnessed the evolution of businesses’ thinking on this issue firsthand: Companies are increasingly realizing that the effort, costs, and risks associated with seasonal hiring can be mitigated with a scalable, pay as you go solution by choosing the right PEO partner to handle it for them.

Not all PEOs have chosen to focus on serving seasonal enterprises – and some haven’t figured out how to do so effectively. For our part, we’ve made seasonal employers a key segment within the industries we serve, and have developed specialized processes suited to their unique needs, and we work collaboratively with clients to develop customized programs aligned with their specific business’s objectives. It’s a formula that has added up to success for many of the companies we work with. We’d be happy to explore your specific seasonal employment needs with you.