If you are in business, chances are that you have at least one employee. In today’s litigious society, it’s often desirable to have a clear outline of expectations of employees and company offerings. One way to establish these expectations is through the creation of an employee handbook detailing the employment laws, policies, conduct of business practices, and benefits.
While verbal communication to employees is crucial, it is very important to create a clear definition of policies and procedures in writing. This allows for protections by outlining labor laws, hours of work, overtime pay, the physical working conditions and expectations of employees. In order to make sure that all employees are aware of the terms of employment and to avoid any appearance of impropriety or partiality, delivering a handbook and having each employee sign for it upon acceptance of employment is a wise practice to put in place.
What should be included?
Creating an employee handbook may seem overwhelming, however, the majority of labor laws are standard rules that vary from location and city and the company specific items are the rules by which you will govern your business. Listed below are a few examples of areas that are important to decide and then communicate to create a standard culture of your choice.
- About the company: What is your company’s history? What is your mission statement? And what are the goals you hope to attain? What work culture are you creating?
- Compliance with federal rules: Every company with at least 15 employees falls under federal guidelines and must comply with the regulations relating to equal opportunity employment, and non-harassment/non-discrimination. It is also wise in this section to outline the expectations of a drug-free workplace.
- Benefits: The new ACA regulations and various other ordinances in your area now require benefits to be offered. This section is where you will outline health insurance benefits, how vacation rules work and how your company deals with sick leave.
- Employee Status: This is where you will define how an employee is classified (full-time, part-time, on call), pay periods and how they can expect to be paid.Work Performance: It is important to explain how each employee will be evaluated and the expectations for their positions.
- Discipline and termination: If an employee is acting in a way that is contradictory to the policies of the company or legal limits, it’s important to have the grounds for disciplinary action outlined, the procedures for pursuing those actions and the procedures for termination.
- Acknowledgment of receipt: In order to make sure that there is a record of the employee receiving the handbook, it’s important to have them sign a ‘handbook acknowledgement form’. The following disclaimers should be included: acknowledgment that this is not an employment contract, designation of at-will relationship, and the company’s right to revise or terminate any policies at any time, for any reason.
There are some great online resources for how to create an employee handbook. In addition, it would be wise to work with an HR professional to assist with policy creation, benefits offerings, and bringing local expertise to the table as the law varies by location. A good HR consultant has the experience to discuss with you options and industry standards and creative ways to create a good benefit package and culture.
In order to obtain the maximum benefits from your employee handbook, it is vital that those policies outlined in the handbook are consistent with the actions of the company. This will provide you with protection should any legal actions or disputes arise.
Our HR staff is committed to ensuring that your company is able to meet its goals and objectives. Click here for a free consultation to find out how we can support you.
While the Affordable Care Act (ACA) has created many new rules and regulations that affect most Americans and American businesses, not everyone is aware that California has its own healthcare regulations that supersede the rules imposed by the ACA.
Changes to eligibility waiting periods beginning 2014
Under the ACA, federally, employers are only allowed to require a maximum 90-day waiting period for any new employee to receive benefits in 2014. California’s AB 1083, however, is much more rigid in its requirement that California employers must end the waiting period no later than 60 calendar days after the employee is hired. The first day of your plan year in 2014 is when this rule will take effect. In order to avoid any difficulties in implementing this change, we recommend that the employee benefit enrollment process begins on the 31st day of eligibility so that by the 61st day, all new employees will have their benefits.
What’s new in California?
You’re probably aware that depending on where you are based in California, there are some very different health care regulations in place. The City of San Francisco has several new ordinances that will become effective on January 1, 2014.
Health Care Expenditure Rates
Under the Health Care Security Ordinance (HCSO), the expenditure rates for 2014 will apply to all businesses with at least 20 employees where one or more employees works a minimum of 8 hours per week in San Francisco. Each employee who has worked for 90 days will require a defined contribution toward health care for each hour worked. For large employers, which the HCSO defines as having more than 100 employees, the contribution is $2.44 per hour. For medium employers, those employing 20-99 employees, the contribution rate will be $1.63 per hour. This requirement will take effect January 1, 2014. To learn more on how the HCSO and ACA overlap, you may visit this website.
The Family Friendly Workplace Ordinance (FFWO)
On October 8, 2013, the FFWO was enacted. It will go into effect on January 1, 2014.
As with the other ordinances in effect in San Francisco, this ordinance will affect employers with 20 employees. Any employee working in San Francisco, who has been employed for at least six months and works a minimum of eight hours per week on a regular basis will be able to request a “flexible or predictable” working arrangement to facilitate management of care giving responsibilities. These employees may make these requests for the following persons:
Children under eighteen years of age;
- A family member with a serious health condition;
- An elderly parent (age 65 or older)
To be in compliance with this ordinance, the employer must meet with the employee regarding the request within 21 days of the request. The employee must have his response within 21 days of the initial meeting.
If the request is denied, the denial must be made via written response with a legitimate business reason explaining the reason for the denial. Employees must be given notice of the right to request reconsideration. More information about the details of the FFWO can be found here.
There are many new changes coming for 2014, but working with a knowledgeable and experienced HR professional will help to ensure compliance and a smooth transition.
Small Biz? Large Biz? Red Biz? Blue Biz?
In our previous article, we offered several important questions that you could be asked in trying to navigate the complicated waters of Health Care Reform (HCR) and help to clarify its effect on your company.
In an attempt to keep things simple, we have broken things down to the two major groups that are affected by the rules of the HCR. This article will clarify how to determine to which of these groups you belong.
Where do I fit in the small business equation?
A small business, as defined on the Obamacare Facts website, is a business that is privately owned and employs 1-250 workers. For the purpose of expanding on our previous post, we will begin with the number of employees. HCR is very tricky in the way that it classifies where a company fits in the small business equation. While there are a few exclusions to these rules, most employers must exercise care in how they calculate the number of employees.
As discussed in the previous article, HCR uses the term full-time equivalent (FTE) employees. The number of employees is set at 50. Those employers having 50 or fewer FTE employees have fewer requirements placed upon them than those with 51 or more employees.
What does the term “FTE” actually mean?
Cutting back the number of full-time employees and replacing them with multiple part-time employees is not enough to take you below the 50 person threshold.
An employee is considered full-time if they work an average of 30+ hours per week. You will want to review each employee’s hours over the past 3-12 months and average the total amount of time they have worked to find out whether or not they have worked the 30+ hours. If they are below that mark, they are considered part time.
Here is the caveat to keep everyone on an even playing field: the total number of hours worked by all part-time employees is divided by 120, which then gives you the number of FTE employees.
For example: If an employer cuts back full-time employees to 40 and hires 15 part-time employees who work 24 hours per week, the FTE is calculated as follows:
- 15 employees x 24 hours per week (96 hours per month)= 1440 hours divided by 120 hours = 12 FTE employees.
- 40 full time +12 FTE employees = 52 FTE employees thus making the company a large business and subject to the regulations governing the larger businesses.
It is important to know how many FTE employees your company has. While there are a few mandates that are in effect now for companies with more than 50 FTE employees, some of the mandates have been pushed off until 2015.
To learn detailed information on how HCR will affect your company and the revisions that have recently been enacted, visit the Obamacare Facts Website and if you have questions make your appointment to get a strategic HR consultation to prepare for the HCR changes that will affect you.
A few important questions you should be asking…
If you’re worried or feeling overwhelmed about all the coming changes due to the Health Care Reform (HCR), don’t be. As complicated as it seems, there is help to navigate the waters. Officially called the Patient Protection and Affordable Care Act, HCR is bringing sweeping changes to all U.S. citizens and legal residents, whether they are currently covered through their employer, individually or not currently covered at all.
While the entire act is extremely complex, in essence, it requires most U.S. citizens and legal residents to be covered by health care insurance and provides a mechanism for access to “affordable” health care plans to everyone, regardless of preexisting conditions or other factors that may have prevented them from receiving coverage in the past. Individuals will be required to be covered or face tax penalties, starting in January, 2014.
How Does HCR Affect Your Business?
This is a great question that doesn’t have a simple answer. However, the benchmark for determining the affects of HCR on your business is whether your company has 50 or more employees, or fewer than 50 employees. In this regard, the requirements under HCR, along with tax credits and penalties associated with HCR vary greatly. Kaiser Family Foundation has compiled a valuable summary of HCR that you can review here.
If you have fewer than 50 employees, HCR will not have such a dramatic affect on how you administer your health care plans, but there are changes that affect your business, including tax credits, plan coverage, renewals, maximum benefits and more.
Some of the most important questions you should be asking (or your employees will likely be asking) are the following…
For businesses with 50 or fewer full-time equivalent employees:
- Does your business qualify for early renewal of your current health plan for 2014?
- Can your employee’s dependent child be now on the parent’s health plan until age 26?
- Has the annual limit and lifelong maximum benefit amount changed?
- Do you qualify for a small employer tax credit?
- What does preventative mandate mean and how will that change?
- Do you know that your employees can now roll over some of your FSA contributions?
- Are your employees required to get their health insurance from you, as long as you offer health insurance?
For businesses with 50 or more full-time employees:
- Is every business required to pay for health insurance for their employees?
- What are the penalties if my company not in compliance?
- Can low income employees get subsidies from the government if you provide insurance for them? What about their dependents?
- What exactly does the California Exchange Program offer?
- What tax consequences does a company or family face in 2014?
While these are important questions, they won’t be the only questions you have. Don’t be caught unprepared for these sweeping changes. Now is an ideal time to get some help to be absolutely certain that your company is in compliance as well as taking advantage of all the credits that may be available to the business now. Our best advice is to get a strategic HR consultation to be sure your company is well-positioned for the HCR changes.
The Chief Financial Officer (CFO) role in a business can be considered as the person responsible for keeping the financial pulse of your the company flowing in a healthy way. Money in, money out, projected profits, future financial planning, tax ramifications and much more all encompass the financial requirements of any business. There is so much to do…but who is keeping proper track of your company finances?
Companies often get caught in the mire of daily operations and forget what an integral role the CFO can play, particularly in relation to all the financial inner-workings of your business.
Perhaps you already have a CFO, or maybe you, as the business owner, are just wearing that hat yourself because you lack a better option. In order for you to gain a better understanding of the CFO role, let’s take a look at the various areas typically covered by that key position in your company management.
As part controller, part treasure and part strategist, the CFO has changed dramatically in recent years, particularly with the advancement of web-based tracking solutions and software. Now, every manager and leader in a company who should have access to key information in an organization can do so in a more interconnected manner. Therefore, the CFO role has evolved somewhat, into a much more leadership-oriented strategic position.
Here are just a few examples of the roles the CFO typically covers::
- Establishing key financial objectives and policies for the company
- Developing and implementing strategic business and operational plans, projects, programs and systems.
- Analyzing cash flow, cost controls, and expenses to determine weak spots and guide senior management to better decision-making.
- Preparation of all financial reports, including P&L and balance sheets, KPI reports, shareholders statements and reports for government regulatory agencies.
- Oversight and approval of expenditures, position control documents, department budgets and mass salary updates.
- Tax planning and overseeing preparation and timely filing of returns.
- Ensuring compliance with local, state, and federal reporting requirements.
- Managing banking relations and capital raising activities for expansion and growth.
- Overseeing accounting department staff, including meeting with department heads to offer guidance and direction.
- Monitor long-range economic trends and projects company prospects for future growth in overall sales and market share, as well as opportunities for acquisitions or expansion.
The CFO role can be varied and complex, but one thing is certain: Having the right person established in that role, whether it is an internal position or an outsourced interim CFO, can make or break a company. The difference between a well-qualified and visionary CFO and someone who just “plays the role” can mean substantial profits (or losses) that go straight to your bottom line.
Have you ever stopped to think about what would happen to your company of your CEO or other top executive keeled over from a heart attack, was lost at sea during his sailing adventure vacation, or was hit by a bus crossing the street? Or what if a key C-level player in your business was simply wooed away to another company? What would happen to your business? Who would take over those that key role?
The time to make those vitally important decisions is before such an event take place and succession planning is your solution. Succession planning allows you to predetermine what steps will be taken in event of the untimely departure of a key leader from your company.
Since entrepreneurs tend to embed themselves into a business as an integral part of operations, succession planning is not a perfect or exact science, but there are some general guidelines to consider when mapping out the succession plan in your company.
There are two different ways to view succession planning strategy in your company: The first is planning for the “emergency” situation that may arise in needing to replace an executive level leader in your company, and the second is looking at succession planning as an ongoing strategy in employee development.
In this article, we’ll start with the executive level plan and in the next one, you will discover more about creating a succession plan as a segment of your employee development.
- What are the key positions to be considered for succession planning? Crucial to your succession plan is the process of determining what roles will take priority in the plan. Start by making a list of the priority executive level positions and base that priority list on not only the key roles, but the duties of each role and whether there are any significant “unique” skill sets held by the person currently in that role. The less you have to rely on any person’s uniqueness, the better you can transition when the time comes.
- Who are your possible successors or what are the criteria for choosing those successors? Identify the individuals currently in your organization who are prime candidates to take over leadership roles in the event of a key executive’s exit. If you aren’t clear about specific individuals in your organization who could take over such a vital role, then start by making a list of the key skills, training and other criteria that anyone in that role would have to maintain.
- What training programs are in place (or will you need to put into place) to properly train candidates as successors? Now that you have become clear on the criteria for a successor in any given executive level role in your company, it should also become more clear what training programs you have available to meet the needs of your succession plan…and moreover, what holes you may have in your systems now. You may need to fill the gap in your training programs to confidently move forward with your succession plan and assure that you will always have a qualified individual in line to take over the leadership reins.
- Are your key executive level processes and procedures documented? The best way to implement a smooth transition is to create “users manuals” for key positions (ultimately, ALL positions) in additional to your training programs for key candidates. When you have your processes and procedures documented, you make it considerably easier for someone else to effectively step into a role previously held by another.
The ultimate succession planning strategy starts from the very beginning of your employee development programs. Succession planning doesn’t just apply to executive level positions; it is also vital to the day-to-day operational positions in your organization.
In the next article, we’ll take a look at succession planning as it relates to your overall employee development plans and programs.
What are your options when it’s time to move on?
Most entrepreneurs live for the thrill of building their businesses. We spend our lives creating and building the vision, developing the business, adjusting to market evolution and riding out the company’s storms. But what do you do when it’s time to settle down, retire, or just move on from the day-to-day operational components of your successful business? There are a number of exit and succession strategies that you can consider. Each one requires forethought and planning so the sooner you start planning your exit strategy, the more effective the process will be.
Before you can decide on which one is best for you, should carefully consider your own goals and what you see as a successful outcome for your exit:
- Do you want to see the business live on beyond your tenure?
- Do you want it to pass to family members, partners or key employees?
- Are you ready to just cash out and retire on a sunny tropical island in the Caribbean?
Let’s explore a few of the many options available to you for exit or succession of your business:
- Direct Succession – Succession strategies can take many different forms. As the key entrepreneurial leader in your company, you have probably placed yourself in an integral position and you may not be that easy to replace. If you have carefully planned your exit and succession, you will have already put in to place employee and leadership development plans in your company that account for your desire to eventually exit the leadership role at some point while leaving the company intact. A succession strategy typically involves “passing on” the company to a family member, partner, an employee, a group of partners/employees, while creating the bridge for someone else to successfully assume over your key role in the business. First and foremost, make sure you have your succession plan in place so the company can continue to run effectively without you.
- Selling the Business – This can also take many forms, including hybrids of the succession strategy. A business can be sold to family members, partners or employees, or to a third party. Third-party sales of a company can include selling to “friendly” buyers or even competitors. One thing to consider if you are looking toward selling the company as an exit strategy is to prepare your company to be desirable to outside buyers. The more you can create systems that don’t rely on the skills or talents of particular individuals, the more opportunities you’ll create for selling the company, and at a higher price. Developing turn-key operation strategies will allow for an easy takeover of operations.
- IPOs – While IPOs sound sexy and dramatic, they aren’t the best option for most businesses. In fact, of the millions of businesses in the U.S. alone, only several thousand are public companies. Nonetheless, for certain types of businesses with huge market potential, an IPO can be a massive windfall of cash that allows a business owner to secure their future moving forward. Just as with the sale or acquisition strategy above, it is important to make sure your systems are in place if you ever want to be able to actually walk away from your key-man or key-woman role in the company.
- Just Shut It Down – Sometimes, the best option is simply to wind down the company, cash out, liquidate assets and move on. One strategy for the “walk away” option is to start taking your money out of the company early in larger amounts over time through ever-increasing salaries. Many entrepreneurs have the majority, or even all of their revenue and assets tied up in their business, so getting creating a viable strategy for getting that money out becomes the magic formula.
There are many considerations to whatever option you choose. There are possible tax ramifications to consider, both personally and corporate, in using any of these strategies and getting professional advice is a prerequisite before considering any exit or succession strategy.
The key to success is planning in advance. There is no time like the present to start developing your exit or succession strategy so you can have peace of mind in knowing that you’ll meet your goals and achieve your desired outcomes.
Some Do’s and Don’ts of Developing Your Company’s Future Leadership
Savvy company leaders recognize that it is the talent of their team that drives the success of their company. One of the most important assets in your company is your “human capital.” Doesn’t it make sense then that the best possible resource for creating a succession plan in your company ties directly into your employee development strategy? After all, who could be a more viable candidate to take over key roles in your company than someone you’ve internally groomed and developed into that position?
In previous articles, we have discussed employee development plans and here we will explore further how you can streamline that strategy into an “executive level” leadership development succession plan that will allow you to prepare and develop employees for future leadership roles in your company’s growth.
Here are a few tips on what you will definitely want to DO as part of your leadership development or succession planning strategy:
- Evaluate the Key Roles for your Leadership Development or Succession Plan – Start by identifying the key leadership positions as well as the duties, skills and abilities required to serve in those positions. Connect the dots to how the role fits into your overall corporate culture and determine likely candidates with that information in hand.
- Create “Career Maps” for Key Leadership and Executive Positions – Determine the logical path of succession or advancement that could create the ideal flow that drives a current employee into a future successful leadership position. Set guidelines and milestones to track progress.
- Encourage (and even financially support) Key Employees in their Continuing Education and Training – Consider making a real investment in your employees (and your company’s) future by supporting key leadership candidates to continue their education. This support can come through actual financial incentives, or can be as simple as providing flexible scheduling to accommodate their educational endeavors. In-house leadership and other specialized training programs can (and should) also be developed for promising candidates.
- Develop Rewards and Incentives Systems – One strategy for determining key candidates for future leadership roles is to create rewards and incentives that encourage employees to qualify at a certain level to be considered for your leadership training and development programs. This can be a creative, fun and even create some healthy competition amongst leadership candidates.
Here are a few things you definitely DON’T want to do in your succession planning and development strategies:
- Don’t Be Driven by Crisis or Come from a “Reaction” Response – The time to start planning your succession strategies is long before you anticipate having to make that change and the last thing you want is to be performing in a “management by crisis” mode. You won’t likely be able to develop a new employee into a leader overnight. So, start your talent search and development processes early. It is better to have too many options than too few.
- Don’t Assume Today’s Succession Plan is Still Right for Tomorrow – From time-to-time, you will want to reevaluate and update your plan, including the key roles and positions, and check in to determine what is working and not working. Your current plan and program should take into consideration your company’s current state of evolution.
- Don’t Do It Alone…Seek Out independent Advice or Consulting – Sometimes the best possible internal plan involves an external professional, such as a strategic consultant or advisor. A fresh set of eyes and someone who doesn’t limit their thinking to “what we’ve always done” can be a great asset to your company as you build your succession plan to develop your company’s future leaders.
Consider these ideas as you move forward with your company’s succession plans and employee development strategies, always keeping in mind that now is the time to plan for the future.
Business owners are facing greater challenges now than ever. The business landscape is changing on what seems like a daily basis. Evolving technologies in production and distribution, increasingly globalized markets, constantly moving regulatory requirements, competition for employee talent and increased employee litigation are just a few of the hurdles that you may be facing in your business right now.
In our previous article, we discussed some important benefits that an independent strategy consultant can bring to your business. The next step is about timing…and understanding the right time to hire a strategy consultant to help your business take it’s next, most important steps.
Not every business may need to hire an outside strategy consultant. In addition, the timing of when to hire a strategy consultant will vary greatly from business-to-business.
If you’re considering company expansion, such as opening a new location or going nationwide or entering new global markets with your business; implementing new software systems or technologies; expanding your services or planning a major reorganization or restructuring in your company, these are ideal times to consider bringing on an outside strategy consultant.
To really get the most out of hiring a strategy consultant, here are a few tips that will help you make a better decision about when to bring a strategic consultant into your business:
- When you need to accelerate project management – When your organization has a project that could increase your bottom line but is currently sitting stagnant because of either a staff shortage or a lack of expertise to complete the project, this is the perfect time to bring in the expertise of a strategic consultant. Hiring a strategy consultant at these times will give you the focus and productivity that you need to complete important projects when your current employee base isn’t able or available to complete the project.
- When you need to maintain team flexibility – Strategy consultants can greatly assist an organization in completing key projects without having to make a long-term commitment for a new hire. For example, if you are experiencing a growth spurt, before you hire a new employee or manager, you might ask the question: “Are we currently experiencing a long-term increase in sales or is this just a spike that we can accommodate in the short term?” Having a strategic consultant enter the picture at these times saves you valuable time and money when you are unsure whether you will need a long-term solution.
- When it’s time for a new perspective – There’s nothing more powerful than a new point-of-view. A strategy consultant can bring a new perspective and fresh ideas to a project, even to your company overall and breathe new life and energy into the project at hand.
- When you need to save money on the project – It can be considerably less expensive overall to hire a strategy consultant for your project than to hire a new employee or even put a current manager or employee on the project. The bottom line is that outside strategic consultant are typically more productive. A strategy consultant comes in, does the job and pushes onward. According to statistics from the Department of Commerce, consultants are productive and focused on the task at hand 90% of the time, versus employee who often spend more than 30% of their time engaged in activities unrelated to work!
Hiring a strategy consultant can be a valuable resource to you and your company, especially when you evaluate the timing of your projects and your need for specific outcomes. Consider these suggestions as you evaluate your current business and you’ll experience higher levels of productivity and more successful outcomes in your company growth through hiring strategic consultants.
There comes a time in the growth and evolution of every business when some key decisions must be made about how to push the company forward. You may have built a solid foundation and framework for your business and now it is time to streamline your processes or consider hiring C-Level executives. Or perhaps you are in the process of expanding and would benefit from the expertise of someone who has already blazed the path before you.
Strategic planning in your business is a vital component to that growth moving forward but oftentimes your internal team is a little too close to the process to have valuable perspective that can make or break your business.
That may be the perfect opportunity to contract with a strategic consultant to bring that much-needed outside perspective to help you set and achieve new goals for your company.
Strategy consultants are experts that specialize in assisting companies to discover their most pressing strategy questions. Strategic consultants typically work closely with the management and executive team to evaluate the current status of the business and its marketplace to develop strategies for growth, set workable goals and strategies for their attainment, and then streamline your systems to accommodate that growth and the changes that come along with it.
Here are just a few of the roles and benefits that an expert strategic consultant can provide you as you contemplate making key decisions moving forward in your business:
- A clear and unbiased perspective – The investment in a strategy consultant is an important decision. The last thing you need in the role of strategic consultant at your company is another “yes man” who simply nods his or her head in agreement with the ideas that have already been laid out on the table. Originality, creativity and an “out-of-the-box” point of view may be just what is needed to create the right solutions.
- Contributing fresh, new ideas – A solid strategy consultant should have the ability to bring a new perspective to your business and generate new ideas that you haven’t already been considering. Their specialty and expertise should contribute dynamic new approaches to what you’ve already laid out on the drawing board.
- Diplomatic, but provocative approach – While you certainly don’t want to create conflict in your organization, the ability to ask the challenging question and provide a little “tough love” will be a key benefit that your strategy consultant can offer you. A good strategy consultant can provide leadership and manage even the most challenging personalities by creating a spirit of cooperation and mutual respect.
- Results-oriented focus – The key role of a strategic consultant is to help you get results that you aren’t likely to get without the outside help. Good strategy consultants have a clear view of their own role in your company, including how long they will need to be involved, how to set the right goals and milestones for progress and the specific results that will equate to a successful outcome on your project.
How you choose a strategy consultant is going to depend on your specific type of company or industry and targeting those consultants who specialize in your area. Hiring a strategic consultant is an important decision so you’ll need to look at the process in much the same way you would hiring a key employee. Look at their background, areas of expertise, history with other clients and ability to interact with your team.
Working with the right strategy consultant can pay off in huge rewards by paving a path for growth and success for your company that you would otherwise not achieve without that clear, focused outside perspective.