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Author Archives: Wise HR Partnerships

Salaries and Small Businesses

How small businesses get in trouble with high cost of payroll

No doubt payroll is a big expense. What I’ve noticed working with small businesses is that they tend to give higher raises IF they give any raises at all.

Here’s the problem:

Small businesses tend to think in increments of $.50 or $1.00. Here’s a typical way it goes down:

  1. Employee is hired at $10.00 per hour to do an entry level customer service job.
  2. 6 months later, the employee does a really great job – gets a new customer or seems to be catching on really well – or even better is starting to save you a lot of time. So, you give the employee a raise. Now the employee is making $10.50 per hour.
  3. Next thing you know, the employee has once again hit a home run – you are feeling really appreciative and it’s been 6 months since they had a raise, so you decide to give him/her another raise. Now they are making $11.50 per hour.
  4. A couple more years go by and you realize that you have not given this employee a raise for a while and they are still doing a good job so you decide to bring them up to $13.00 per hour.
  5. Over the next 3-5 years you continue in the same vain giving her/him bumps in salary on days when business is going well and you’re feeling generous and now the employee is making $18.00 per hour. The job has not changed in all this time but the salary has not doubled. Really? Are they worth twice as much to your business as they were when they started to work? Maybe so, maybe not. Your resentment toward how much money this employee is making begins.

Believe me, this is not the way Corporate America does business. They give 3-5% increases annually. Here’s how that would look using 4% increases annually as an example.

Year 1 – $10.00

Year 2 – $10.40

Year 3 – $10.82

Year 4 – $11.25

Year 5 – $11.70

Big difference huh? So if you are the employer who is giving the raises when you feel generous, STOP! Consider this:

Give bonuses, smaller ones like $50. Employees won’t feel the appreciation or love any longer whether you give a bonus or increase their pay. The problem with the pay increases is that you’re stuck – if business is in a downturn you’re stuck with that employee at that salary. The only way to change it is to lay the employee off and hire a new employee back at the $10 per hour.

Have annual performance reviews and consider increases closer to the Corporate America version. Most of all, base the salary on their performance, completing their goals and ultimately their value to the company. That will significantly reduce the resentment factor

Consider a cap on the salary for a job that will never really be worth $20 per hour. If you have an employee who works hard, does their job but never really wants to grow or take on more responsibility you can cap the salary so that you don’t’ end up paying more than the job is worth. You can still give bonuses but you don’t’ get yourself into a situation where you’re paying way too much for that job.

If you are one of those employers who feel like you hired the employee at a fair salary 5 years ago and have given bonuses along the way but never raised their pay rate, that is not a good idea either. That employee is at risk for getting picked off by another company offering more money. Again, the employee does not remember the bonus you gave them at Christmas – which was the same as everyone else’s by the way – they just compare their pay rate with the other company. You lose! You lose the employee who may have been doing a great job but you’ve failed to let them know and reward them.

Don’t Be a Dumping Ground!

We’ve all heard Harry S. Truman’s famous quote, The Buck Stops Here. I agree that the top leadership has the final say, sets the direction and the buck stops with them.

However, that does not mean that you, the leader or manager, should be a dumping ground for your direct reports! Teach them to fish for themselves. Are you teaching your employees to fish or are you the dumping ground for work and issues that they don’t know how to resolve or because “it’s not their job?”

The leader in the business or organization should be leading – setting the strategic direction for the company, looking at the big picture and communicating the plans to the staff. If the leader gets caught up in all the issues that other employees dump on them they don’t have the time to take care of the bigger matters.

Here’s a few tips on how to get away from being the dumping ground:

  1. Ask the employee how she/he would handle the problem and if you agree, reassure them that they can handle it. If you don’t agree, tell them how they should handle it and give them the confidence and authority to handle it.
  2. Look for a pattern of what is being dumped – teach someone else how to handle that work and if necessary, add it to someone else’s job description.
  3. Watch how controlling you are as a leader – is the reason for the dump because you feel like no one else can do that work. Question yourself and your reasons for taking the work or issue. Is it really necessary for you to handle that work or can someone else be trained or be given the added responsibility? By the way, most employees like to learn now things and take on more responsibility – it makes their jobs more interesting. If they don’t like to take on new responsibilities – you may have the wrong employees.

It’s All About Habits

The Key to Success – is Success!

The big key to making improvements your life is breaking old bad habits and creating new ones that serve you well. There are several great books about habits – Switch by Chip Heath and Dan Heath, The Power of Habit by Charles Duhigg and One Small Step Can Change Your Life by Robert Maurer.  They are all great books and worth reading. I’ll share one idea from each book that resonated with me.

In the book, One Small Step Can Change Your Life, I learned that success breeds success. The way to create your success is to set the bar low enough that you can’t help but succeed. That success, no matter how small, will propel you to want more. The author tells a story of a doctor whose patient was a single mother with several children and she had little to no time left for her own self-care – like diet and exercise. The doctor asked her if she could march in place during one commercial every evening. She quickly agreed to the assignment and soon she was finding more time to exercise. So the key to success is success.

In the book Switch, the Heath brothers remind us of how important it is to create an environment where we can succeed. That environment may mean that you surround yourself with people who also care about your success or if you are trying to eat healthy food, to make sure it is readily available. The ability to create new habits is like building a muscle. The more you do it, the more muscle memory you have and the easier it gets.

In the book, The Power of Habit, Charles Duhigg shares the habit loop, which includes the environmental cue, the behavioral routine and those lead to the reward. Duhigg encourages us to look at each of those separately and by perhaps changing the environment you can change the habit. Or, changing the routine that comes from the cue could change or create a new habit or change the reward. An example might be if you want to get up earlier in the morning to exercise, you might want to turn the television off and read at 9 p.m. Changing your environmental cue might lead to going to bed earlier and getting up earlier to exercise. If you want to change the routine, you might exercise first thing in the morning – your cue being getting up in the morning and the behavior routine is exercising as soon as you get up. Lastly, the reward. In the example of exercise, you might decide that every time you exercise in the morning your reward is going to your favorite movie over the weekend.

No doubt there is something to be said for 21 days to create a habit. That is reassuring to me, if I can just stick to the new habit for 21 days I’m home free. This year I decided to create a new habit each month. It’s pretty exciting to think that I could actually create 12 new habits in 2017!  I have an accountability partner and a list of habits that I’d like to change – that could really take my life into a new direction. My challenge is to make sure that I am limiting what I want to change to one habit a month. That way I have a better chance of success.

What habit would you like to create or get rid of?

The Crack Down on Immigration – What it means to Business Owners 

Business owners today are 3 times more likely to be audited by ICE. We have heard and continue to be reminded by the President and the media that the Trump Administration places a high priority on immigration reform.  This really matters to business owners. Here’s why. 

Immigration Customer Enforcement (ICE) Agents and the Department of Homeland Security are the two government agencies who enforce I-9 compliance. The Trump Administration is hiring 10,000 more immigration and custom enforcement agents. Their focus will likely be to make sure employers have compete I-9 forms for all employees. And if your company has 25 or more employees, you’re required to use E-Verify for all of your new hires.

Are you ready? 

On November 6, 1986, the enactment of the Immigration Reform and Control Act required employers to verify the identity and employment eligibility of their employees and created criminal and civil sanctions for employment related violations. This means that all employers are required to verify the identity and employment eligibility of all individuals hired in the United States by requiring the employee on their first day of employment to complete the Form I-9 as the means of documenting this verification. Employers are required by law to maintain for inspection original Forms I-9 for all current employees. Employees who are no longer active, retention of Forms I-9 are required for a period of at least three years from the date of hire or for one year after the employee is no longer employed, whichever is longer.

More of what you need to know

  1. There is a new I-9 Form that is available now and the one we have been using becomes obsolete on January 22, 2017!  Download the new form – it is a “smart form” so you can even fill it out on line and then print it to sign and file. Here is the link to the form: https://www.uscis.gov/i-9. A couple of important things:
  2. You do not need to go back and complete the new form on current employees, only on employees you hire from this point on.
  3. One key change is thatyou must enter N/A on any fields that previously would have been left blank. – trust me, if you don’t you could incur penalties if audited.
  4. Make it a priority to audit your I-9 forms and make sure you have them completed, and completed correctly, on every employee you currently have.
  5. File them correctly so you do not open yourself up to a broader audit if you are audited.Do not file the forms in the individual personnel files – they must be filed separately in a notebook or separate file.

If you have questions or need assistance contact me through the contact form or call me at 704-650-8684.

 

Small Business = Big Hiring Challenges

To celebrate small business week, we’re tackling the issues that mean the most to our small business clients.

 

It’s the age-old small business challenge: What do you do when your business is booming but you are worn out and your family isn’t happy about the time you spend working? Or, your earnings have plateaued and you’ve maxed out on what you can earn with only you doing the work yourself – and it will eventually impact customer service.

There are many benefits to hiring, but there are also many risks and concerns to consider:

  • Is the timing right? Whether it is your first or third employee it always seems too late for your business or too early. Finding that sweet spot is really difficult. Hiring another person is a big commitment to that new employee and by extension to their family. They are relying on you and your business for their livelihood! And you are counting on your business to continue at the current pace and profit – you’re hoping you’ve made the right decision.
  • How will I train him or her? You’re already really busy, right? If you weren’t you wouldn’t be making the big decision to hire someone. So now you have to spend hours training the new hire with hopes it will save you time in the long run. Finding time to train is an investment that will likely come from time you would spend with your family or taking care of yourself.
  • How do I find the right fit? What if the new employee can’t do the job or isn’t the right fit? How much time do you give them to learn and acclimate when it is looking like they will never “get it!”
  • Bad hire? Must fire. You’ll eventually have to have that conversation – the one where you tell them that they are fired. That is really scary for business owners.

A study done by Robert Half shows that 58% of small business owners said it took less than a month to realize they made a bad hiring decision. However, it took an average of 8.8 weeks to let that person go; and nearly an average of five more weeks before a replacement started working. During this time 68% of businesses put the workload on existing staff. This is probably no surprise to you if you’ve hired an employee for your business that hasn’t worked out.

So what do you do? Well, you have an accountant to do your taxes, don’t you? What about an attorney to manage your legal stuff? Just like other important services you hire out to professionals, there are options for professional services that help you hire and manage your workforce.

Option 1: Use a “temp agency.
Using an employment agency that offers temporary staff greatly reduces the risk to you as the business owner. It can protect you from not only hiring the wrong person, but also to help manage temporary upturns in your business that may not last.

The agency will spend the time finding a possible match and if it’s not quite right, you can call them with feedback about what didn’t work and have them send you a better match. And if the upturn in your business doesn’t last, you can cancel the arrangement.  The drawback to these agencies is a potentially limited candidate pool since employees are chosen from the agency’s database.

Option 2: Hire someone to find the right candidate
If you’re confident in your business growth and need to make a non-temporary hire, just like you use the services of an accountant or attorney, using the services of a professional firm to hire can make all the difference. The wrong hiring decision is costly to your business because of the time you spend training and the increased stress on you and your company.

Wise HR Partnerships works with small employers to help find the right match for your company, your job opening and you, the business owner. Wise HR Partnerships has been helping folks hire employees for 30 years and while your job is unique we can assist you in the process.

Copyright 2016 Wise HR Partnerships

704.650.8684 | 442 S Main Street | Davidson, NC 28036