Employee’s Total Paycheck More Than Pay

If you are a business owner, your gut reaction to the estimation of the employee’s total paycheck might be, “Way too much.” All kidding aside, total compensation is most likely one of the largest items on your balance sheet. Educating employees and management as to what those costs entail is crucial to your recruitment and retention efforts and allows you to make better business decisions.

We saw an ad that offered a starting wage of $24 per hour. When you dug a bit deeper, that was the total hourly compensation, including benefits. That made the $24 much less attractive. How do you compare? Run a total compensation report. I bet you will be astonished if you haven’t looked before. For some industries, the amount of non-wage compensation adds 30-50 percent to the cost depending on worker’s comp requirements and costs.

Once you know your numbers, get your employees engaged in a conversation. When you are transparent with your compensation reports, and you have a great compensation package, an amazing thing happens. Employees feel valued. Their first reaction will probably be, “Wow!” Next, they begin to think, “In order to increase my value, I need to demonstrate ‘x’ to my company.” Improved performance will pay dividends.

Evaluating your total compensation

Wage - Employees typically focus on wage as a judgment of their worth. Is the salary you offer commensurate with other like jobs and companies? How do you know? Wage and hour surveys by industry are available through a paid service and often industry associations themselves can provide that level of detail via an annual survey of membership. These give you a benchmark for pay scale range. Low rankings should encourage moving up to be competitive in the market.

Benefits - These range from tangible (e.g., healthcare, mileage, holiday parties, etc.), to intangible (e.g., paid time off, flexible hours). The “why” of The Applied Companies is to create a great place to work. The cost of that is not cheap. We are aware of several companies that canceled their group health insurance due to the Affordable Care Ace (ACA), not replace it, and thought that they would pay the 2 percent penalty and that would save significant money versus offering the benefit. Not in the long run. Remember spend money to make money. “A” candidates require health insurance to recruit them away from a competitor, and stay when a competitor entices them to leave.

Engagement equals increased employee satisfaction. Offering a valued compensation package and then making sure you let people know how amazing it is a sound HR strategy.

Jim Annis is president/CEO of The Applied Companies, which provide HR solutions for today’s workplace. Celeste Johnson and Tom Miller, Applied’s division directors, contributed to this article.

How Does an Employer Create an Employment Brand?

Our reputation as an employer is important. Our image affects talent attraction, engagement, and retention strategies. In this competitive marketplace, HR has become a marketing arm for employees just as traditional marketing departments apply tools for attracting and retaining clients and customers. Here are some tips for creating a relevant employment brand:

Define your attributes

  • Success – It is a magnet for employees who want to be successful. Create it, document it, then talk about it.
  • Construed external image – An insider’s assessment of how outsiders view the company. It is not the same as how outsiders actually see the organization (organization reputation).
  • Product or service characteristics – The salient aspects of what you do/sell and how employees/prospective employees engage with your company offering


Acknowledge and assess alignment

You are visible to the market through stated and expressed values. In the war for talent, be sure that your employment brand works in your best interest, or change it! Do your values and employment brand match? A right-fit employee will align with the company, what it sells, and how it sells. For example, I cannot go out networking in cowboy boots. If my company were a feed store – that would be ok! – but we’re not so I wear a suit. We have a client company that distributes sexual healthcare products. Their employment brand makes it very clear that if you have a problem with what they sell, then you should not work there. We admire that kind of approach.

Positioning

Discouraged that a high-tech company might “outshine” your mature industry employment brand? Don’t be. Beer, jeans and kicking back at 4 p.m. on a Friday does not make it a great place to work. We encourage you to start with “why” (Simon Sinek). Our goal at The Applied Companies is to be a great place to work. We define that as an employer with open communication, meaningful work, and quality of life. Other companies may have an employment brand that states, “Make as much money as we can.” Which company do you believe will have higher employee retention?

Modeling the way through thought leadership

Research demonstrates that nearly half of a company’s employment brand is: 1) tied to the CEO and; 2) how well they are positively perceived in the community. Be known for your employment brand best practices. Write about them in visible ways. Be available to reporters and communicate your willingness to discuss trends with them.

Look at your company culture. Does your employee value proposition define your organization’s employment offer? Is it competitive in the marketplace? If not, maybe working on your employer brand should be your New Year’s resolution!

Written by Jim Annis, President/CEO of The Applied Companies, which provide HR solutions for today’s workplace.  Celeste Johnson and Tom Miller, Applied’s division directors, contributed to this article.

Why Not Hire a Narcissist?

The original narcissist was Narcissus, a hunter renowned for his beauty. He was proud and disdained those who loved him. Nemesis, goddess of retribution against those who succumb to excessive pride, attracted Narcissus to a pool where he saw his own reflection. He fell in love with it, was unable to leave his own “beauty,” and eventually died there.

There are many types of Narcissism. Arguably, humans are all narcissistic to some degree. We exhibit a healthy narcissism and concern about our well-being, which protects us from falling victim to predatory behavior of others. Malignant narcissism, a psychological syndrome comprising an extreme mix of narcissism, antisocial personality disorder, aggression, and sadism, is typically harmful in the workplace.

Spot one

Weed out the narcissist using the following characteristics:

  • Exploitative/entitlement – believe they are entitled and manipulate to their advantage
  • Leadership/authority – prefer these roles and always have the “one” right answer
  • Self-importance/arrogance – believe they are inherently better than others
  • Fantasy/Preoccupation – they must have unlimited success, power, brilliance, beauty, or ideal love
  • Self-absorption/lack empathy – they are the center of the universe and require excessive admiration

 

Avoid a hire

Narcissists do well at interviews. Confidence and boasting in this “natural environment” often creates a positive impression because they make eye contact, tell jokes and ask the interviewer relevant questions. Ask them questions that seek the person’s locus of control (extent to which individuals believe that they can control events that affect them). Locus of control is either internal (the person believes they can control their life) or external (they believe that their decisions and life are controlled by environmental factors that they cannot influence, or by chance or fate). We want the former.

Acknowledging the dark side

These grandiose individuals enjoy raising hostility levels, undermine their work environment, and tend to dehumanize others. Detrimental in a team context, they tend to be abrasive, dismissive and may breed an unhealthy form of competition. They may fool you for a while but then the house of cards falls.

Get them out

Please do not get stuck in “I will never find anyone to replace this person.” Narcissists never bring enough to the table to make the destructive part of the personality worth it. Manage them right out the door and listen to the collective sigh of relief.

One of the sports examples I like to use is the San Francisco Giants. As long as Barry Bonds – coined “The Great Narcissist” – was with the Giants they never won a world series. He was a seven time Most Valuable Player and yet the Giants never won the trophy when he was a member of the team. Makes you think doesn’t it? When will you address the narcissists in your company in order to win?

Written by Jim Annis, President/CEO of The Applied Companies, which provide HR solutions for today’s workplace. Celeste Johnson and Tom Miller, Applied’s division directors, contributed to this article

How Employment Agreements Work and Work For You

Let’s talk about employment agreements. Hello? Have you fallen asleep already? They may be a little dry and boring, but important, as they are tools that increase the value of your relationships and help your company manage risk.

Do you need them? Please do not get advice from your buddy on the golf course on this question – unless he is an HR professional – as it could cost you $20K in a wrongful termination lawsuit. The advice usually takes the form of, “less is more,” meaning do not put the agreement in writing at all. We disagree. The first thing an attorney will ask is, “Where is the employee handbook?” Without one, there are no rules and if you get sued you will lose. Our recommendation is that you have agreements in place to set up expectations ahead of time and use what works best for your situation in accordance with the law.

Noncompetes – Not everyone needs one. The types of employees that are relevant are sales people (access to client lists), people who influence strategy like high level C suite, and engineers or others who write proprietary code and create intellectual property. The non-compete may not impede future employment, outlines what is and is not allowed, gives a timeframe, and sets the stage for legal recourse if you can quantify damages, i.e., loss of clients.

Confidentiality Agreements – These agreements overlap to protect sensitive technical or commercial information from disclosure to others. If the information is revealed to another individual or company, the employer has cause to claim a breach of contract and can seek damages. They also prevent the forfeiture of valuable patent rights, which happens often and is usually unintentional.

Severance agreements – With many moving parts and legal requirements, these focus on one key word – exchange. Typically, the agreement outlines the consideration (money) in exchange for language that implies “you (employee) will not sue me.” Severance agreements are appropriate in situations where an employee may feel the need to talk negatively about the employer in the marketplace. You cannot waive all rights, go beyond the legal boundaries, or ignore other laws regarding age discrimination or WARN Act (over 50 employees) requirements for mass layoffs.

Equipment agreements – Company provided cell phones, tools, hard hats, calculators, laptops, etc. are covered. For most companies, equipment is not addressed upfront and an employee may see a related deduction from their final check. That is not legal; however, you can pursue other means of compensation.

Bottom line: You are better off with employment agreements versus without them so that you can set expectations ahead of time and quantify your risk exposure.

Written by Jim Annis President/CEO of The Applied Companies, which provide HR solutions for today’s workplace. Celeste Johnson and Tom Miller, Applied’s division directors, contributed to this article.

How to Deal with Staff Turnover

This is the second article in a two-part series on turnover. With turnover, there is always a positive with a negative. Focusing on the positive and mitigating the negative is our goal.

Communication

We approach each case with compassion and care about the employees as persons, assure them their opinion counts and are generous with praise as we work our way through. We also keep everyone in the loop within legal limits.   We say, “This is what is happening. We need your help,” and ask staff for input on hiring, skill set, and best fit.

Do you really need to replace that headcount or can you streamline and redistribute?

From top to bottom, we think out of the box to create the best result for the company. We ask questions – some simple some difficult – like is it time to search for new software or technology? Are any/all processes necessary? Is there someone internally who can be challenged and move up? Can we adjust the job duties and roles to fit a new, model “right” fit? My very first employee is retiring next year. She knows that the file cabinet in the corner was our first piece of furniture. How to you account for that knowledge? How do you capture it?

Do you choose to “celebrate” or “carry-on” depending on your culture?

Celebrations are reserved for those relocating (leaving the geographic area), leaving the workforce (being a stay-at-home parent), retiring (having a new beginning) or other non-competitive scenarios. If they are going into a competitive position, we do not celebrate. As I said in the first article, I take things personally as CEO because I know they are working for THE BEST company right now. Something organic like a potluck may develop, which may or may not be supported by management on a case-by-case situation.

For those who separate from our organization on an involuntary basis, it is uncomfortable sometimes. We may appear as if we simply carry on, but we don’t. We review what we do, how we do it and determine if there is a better way.

What matters the most

Turnover can be gut wrenching, a time of reflection, a great time to change the direction of the company and an opportunity to make it a great place to work. Focus your time and energy on keeping the right people versus worrying about the cost numbers. Once you get your turnover in control, the flip side has it’s benefits! An engaged workforce has 27 percent less absenteeism, provides 12 percent higher customer satisfaction; 18 percent higher productivity; and is 12 percent more profitable. Now those are the “positive numbers” you want.

Written by Jim Annis, President/CEO of The Applied Companies, which provide HR solutions for today’s workplace. Celeste Johnson, Tom Miller, and Suzanne Chennault, Applied’s division directors, contributed to this article.

The Cost of Turnover

This is the first in a two-part series on turnover. There are all types of statistics out there about what turnover costs an organization in terms of quantitative and qualitative.

Real Cost

Numbers I prefer are 59 percent of annual salary for the rank-and-file, 100 percent for a mid-manage, and 150 percent of C level. Whatever you choose be real and consistent. Valid costs include advertising, time invested in resume reviews, interviews/skill testing, reference checking, drug testing, training and background screens.

Hidden Cost

Customers feel the loss of a right fit employee leaving, and feel the relief of a poor performing employee leaving. The same goes for internal people who remain. The exodus of Boomers from the workplace has already caused significant loss of institutional knowledge that turnover exacerbates. The stories that make a company culture and become part of the brand are being chipped away.  Why accelerate the process with turnover that can be avoided?

Cost of Repeat Turnover

You eventually waste time, money, energy and effort versus growing and streamlining. The true cost is lack of trust – by staff and your customer – that you have a handle on your business. Staff costs include negative attitudes, more turnover and poor performance. Customers experience negative attitudes. They also may move their business elsewhere, disengaged and disinterested because of the lack of long-term relationships with internal contacts and poor fulfillment.

What the Numbers Don’t Tell You

In my role as CEO of chief of my “tribe,” I have opposing viewpoints on voluntary versus involuntary separation. As a business owner, turnover is personal. I admit it. Do you?

For those that are involuntary, businesses take WAY too long to make a decision. We give employees ample opportunity to perform and time to “change” so that when it’s time to “go,” there is less emotion. From this chair – with the responsibility for 32 peoples’ livelihood – I take it very seriously. We don’t cavalierly lay people off. I lose sleep over it, but you have to protect the organization/the rest of the “tribe.” There is no “number” for that, it’s priceless. 

As a leader and a person, I am truly sorry when people leave voluntarily. I am proud to say one of my tribe has been with us 12 years. We try to hire the right people and work diligently to create a positive environment. It is clearly not just a functional void, but also an emotional void in the organization when someone chooses to leave.

If you’re going to measure the “cost” of turnover; be honest and avoid sugar coating. Take responsibility and action to correct the problems that exist in the organization that may be affecting the longevity of your workforce. 

Written by Jim Annis, President/CEO of The Applied Companies, which provide HR solutions for today’s workplace. Celeste Johnson, Tom Miller, and Suzanne Chennault, Applied’s division directors, contributed to this article.

The Primer on Mobile Recruitment

Mobile Recruitment is the act of finding job candidates actively and passively through the use of mobile career pages and internet recruiting strategies through social platforms. Here’s a shocker – 1 BILLION job searches are done per month on a mobile device. Indeed.com, the metasearch engine for job listings, has the number one free business app for iOS and Android. Seventy percent of job seekers are using mobile technology! Disconnect – only 26 of the Fortune 500 offer a mobile optimized job application process. Your business can be more nimble. At The Applied Companies, we communicate with the bulk of temp-side candidates via text. People are using our website application process via mobile. Nearly 30 percent who accessed our website did so with a mobile device or a tablet.

Why is it needed? 

From the job seeker perspective, flexibility, convenience and immediate notices are a competitive edge. Getting a feel for the technological capabilities of the employer may determine if they’re a good fit. In the temporary employment side, first come first served is the name of the game. Employers can streamline their processes because mobile recruitment (properly executed) has a conversion rate five to 10 times better than PC, at 20 percent of the cost. Mobile recruitment abilities can help set you apart as a preferred employer and attract and engage tech savvy millennial talent.

Best Practices

From SMS job alerts to LinkedIn email, responsiveness is the job seeker’s mantra. Seventy percent of mobile searchers act within an hour; only 30 percent of PC searchers do. Employers can use mobile search engine optimization, mobile career pages, and highly targeted mobile recruitment campaigns. Doing more with the right less via mobile is cool and relevant. Employees want to be proud of where they work and reflect a company’s tech values. If your application process is not easy or quick, good talent will look somewhere else.

Video capabilities via mobile are great tools. Executive search uses Skype to interview candidates versus shouldering travel costs. Candidates submit video resumes with a green screen. Vine’s six-second videos are a creative way to post job position openings and give a peek into your corporate culture with company visuals. Job candidates can be required to submit their own Vine video as part of the application process, like “selling” one of your major products or services with a six-second video.

Limitations

You can identify a candidate; however, they may not be the person you would hire. Job seekers may not feel the company environment is a good fit.

Once mobile narrows the field of potential employers/candidates, you can then spend quality time looking at your top five choices.

Written by Jim Annis President/CEO of The Applied Companies, which provide HR solutions for today’s workplace. Celeste Johnson, Tom Miller, and Suzanne Chennault, Applied’s division directors, contributed to this article.

Learn a Thing or Two about Financial Statements

“I am a people person; therefore I am not a numbers person.” We hear this all the time in the Human Resources (HR) world and encourage overcoming the “fear” of numbers to achieve career growth. The United States Securities and Exchange Commission (SEC) says it the best, “If you can read a nutrition label or a baseball box score, you can learn to read basic financial statements. If you can follow a recipe or apply for a loan, you can learn basic accounting. The basics aren’t difficult and they aren’t rocket science” (basic addition, subtraction, multiplication and division). Here are some hints at gaining financial insight to help you become an “asset” to any company (pun intended):

Job Seekers 

Look for financial information prior to accepting an interview. For public companies, review financials posted on SEC.gov or Edgar, which include quarterly and annual filings and the variances. Not-for-profit organizations are required to file 990s with similar information. For private companies, look on About, press or news sections of their websites and social media. Use the information to develop interview questions: Have you maintained your workforce? Do you foresee layoffs? Do you have appropriate cash flow? Are you forecasting growth?

Employees

If you are subject to a bonus, and you have made plans for that money, it would be prudent to review your company’s financials to see if they are on track profitability-wise. Ask questions. Think beyond the job in front of you.

Managers

Schedule time with the in-house accountant to explain your department’s status individually and in relationship to the company as a whole including; annual expenses, industry benchmarks; budget forecasts (is it realistic and do you have control?); budget and cost assumptions; variances and fluxes; period to period reporting; current internal controls; and how goals are set. Keep your financial partners accountable and ask questions until you feel comfortable. Ask what you can do to make accounting’s job easier, it’s a great way to build a partnership.

Business Owners Keep Your Eyes Open

Can you determine what is reasonable and explainable? Understanding the relationship between profit and loss statement, cash flow and the balance sheet is key. If items are not moving on and off the balance sheet, that’s a red flag. Hire an independent (not related to anyone at the company) CPA firm do an independent review to keep everyone honest. If you suspect criminal activity, engaging a forensic accountant is an option.

Why should you care?

Financial knowledge is power that can help you be more marketable, valuable, and integral. For the SEC’s basic brochure on how to read financial statements, go to “The Beginner’s Guide to Reading Financial Statements” at www.sec.gov/investor/pubs/begfinstmtguide.htm .

Written by Jim Annis President/CEO of The Applied Companies, which provide HR solutions for today’s workplace. Celeste Johnson, Tom Miller, and Suzanne Chennault, Applied’s division directors, contributed to this article.

The Benefit of Employee Benefits

Over 100 years ago, Montgomery Ward & Co. needed an innovative way to care for their employees and protect them from financial hardship. Founded in 1872, the company was known for its ground-breaking ways. Customers were attracted to Montgomery Ward & Co.’s unprecedented policy of “satisfaction guaranteed or your money back,” which it implemented in 1875. A few years later, they were neck and neck with Sears Roebuck, and the two companies struggled for dominance throughout the 20th century. In 1910, Montgomery Ward & Co. implemented the first true group health insurance plan.

Should You Offer Employee Benefits? 

Fast forward to 2013. Providing benefits is a key competitive advantage. Losing one key employee can bring down your entire operation. We are not in a recession. People are hiring. Direct hire is picking up. The probability that your “A” players will be recruited away in the next five years via another company’s robust benefit plan is high. In my world, one of the continuous conversations business owners have is whether employers want to pay or play under the Affordable Care Act (ACA). You will have to “play” to keep “A” talent. If employers with 50 or more employees choose to offer health insurance independently, their offering will be more robust and attractive than an exchange plan.

 Which Ones? 

Anything is valued by those you want to hire and the current employees you want to retain, especially director level positions. In 2012, the Society of Human Resource Management (SHRM) published, “The Employee Benefits Landscape in a Recovering Economy” (http://www.shrm.org/research/surveyfindings/articles/documents/2012_empbenefits_report.pdfbased on its annual benefits survey. It lists the over 300 types of benefits addressed in the survey, everything from traditional 401K plans, to down payment assistance, and increasingly popular technology discount benefits. We believe workplace flexibility policies support employees’ work life balance; provide predictability and stability to employers, all with low costs and high returns. The Applied Companies pay for 40 hours a year per each employee for volunteer activities.

Why?

Do you want good people or not? A key factor in future hiring negotiations will mirror history – the value of the benefits package. As Boomers get older, they may decide to stay with your company. Good. You’ll retain that institutional knowledge. Benefits packages can help hang on to those “A” players until you can undergo a succession planning process and knowledge transfer to their replacements. Offering a valuable benefits package reinforces your company culture and increases your productivity level.

Offering employee benefits is good for your business.

Jim Annis is president/CEO of The Applied Companies, which provide HR solutions for today’s workplace. Celeste Johnson, Tom Miller, and Suzanne Chennault, Applied’s division directors, contributed to this article.

The Value of Exit Interviews

When putting the ideas for this article together, we first admitted that we do not conduct exit interviews ourselves. In being honest with each other, we realize that we fall into the same trap that other companies do. How would we improve something we do by using an exit interview process? Would we ask questions because we "think" it is the right thing to do? Or, is the reason we've never done it just status quo? We reflected that when someone is fired, we really do not want to go back and relive and rehash everything. When someone leaves, we are too busy trying to find a replacement. As HR industry experts, when we looked at the topic of exit interviews, there are varying opinions as to their value. So what's the best way to conduct them both from the employee and employer perspective?

The Employee Side

If you are the employee that is leaving - either voluntarily or not - an exit interview truly is not the time to be "honest" to a fault. There is always a polite way to tell the truth. This is not the time for over sharing. Avoiding burned bridges is key, because through the Internet, we are all connected more than ever. You may wind up working for the company again if you are leaving on favorable terms. And if you are not, moving forward while maintaining the best possible relationships will help your career in the long-run. Words to remember include respectful, constructive, positive, and objective. Ideas on how to improve the company - without slamming anyone personally - are safe topics.

The Employer Side

The value of an exit interview can be realized through people, policies and procedures and may yield positive business results. Our philosophy would be to treat it like a disciplinary action by focusing on the action not the person. Having a neutral third-party independent contractor conduct exit interviews is a great way to maintain data integrity, keep it a true process, and neutralize emotions. Questions should be consistent for each employee leaving the company. Asking productive questions that can make the most impact makes sense, for example, "What is a company process that you would change and how would you improve it?" This is not an invitation for open-ended questions where the exiting employee feels free to write a narrative of their life.

An exit interview is the first step to a job interview - for the replacement person and the next position for the employee that is leaving. Ensuring that progression happens positively is the real goal. 

Written by Jim Annis, president/CEO of The Applied Companies, which provide HR solutions for today’s workplace. Celeste Peterson, Tom Miller, and Nissa Jimenez, Applied's division directors, contributed to this article.