New Final Rule on Exempt vs Nonexempt Employees - Action Required by July 1st
Business owners ask me questions all the time about the rules regarding Exempt vs Nonexempt employees (mostly as it relates to overtime pay). If you are a company with 1 employee or 5,000 employees, you need to pay attention to any changes to the FLSA, and we just received a new rule that requires a big change starting in July.
First off, let's help you understand this part of the Fair Labor Standards Act (FLSA). All employees governed by the FLSA (which are most in our country) are required to be paid minimum wage and payment for working overtime. The FLSA has an “exemption” for certain employees to not be subject to this regulation. This means they are “exempt” as a classification. As small business owners, this usually matters to us because we don’t have to pay exempt employees overtime pay. On the flip side, if the employees do not qualify for an exemption, they are classified as “non-exempt”, and you must pay them overtime when they work over 40 hours in a work week.
What makes an employee exempt?
The popular misconception by my clients is that they get to choose. However, it is not up to you. The business can’t make that determination. The classification is defined by the job duties, pay level, and pay type. You can classify an employee as exempt only if they pass the job duties test, the salary threshold test, and the pay type test. And they need to meet all of them, and not just one or two.
1. Job Duties Test - They are given little supervision and have the authority to make recommendations. Their titles can look like the following: lawyers, accountants, marketing professionals, business executives, managers, etc.
2. Salary Threshold Test - The employee gets paid over a certain amount (we will talk about that in a minute).
3. Pay Type Test -Their pay doesn’t change week to week (salaried not hourly). Do not fall into the trap of thinking everyone that is salaried is automatically exempt because their pay type is NOT the sole determination. You cannot take an employee who should receive overtime pay, pay them as salaried instead and then call them exempt. It just does not work like that, and you can get in some trouble with the DOL if you try.
There is a also a Specific Job Test that bypasses the above tests that you can look up on the DOL website for specific jobs (for small businesses, this would be like outside salespeople and some computer/IT based employees) that would make them exempt.
Other than these exemptions, everyone is non-exempt. For my small businesses, that means these types of jobs - administrative assistants, bookkeepers, customer service people, and any clerical level employees are non-exempt. Basically, anyone that has more routine tasks and takes direction - these people have no exemption from the rule.
There are also certain industries that have special exemptions such as automobile dealers. So, it is always best to check the regulations!
Now what changed with this new “Final Rule”?
One of the parameters in the list above (#2) states that one “test” of whether a position can be exempt is the salary threshold test. To be exempt, you can make no less than $35,568. If you make less, you are automatically non-exempt no matter what your job description says.
Well, that salary number is changing in a big way. In this final rule, the salary threshold will increase from the present (since 2019) annual salary threshold of $35,568 to the annual salary of $43,888 and increases to $58,656 on Jan. 1, 2025. This will go into effect on July 1, 2024.
So, what do you do because of this change?
For this current change upcoming, you need to query your list of employees that make under $58,656 and they will need to be reclassified as non-exempt by July 1.
What will this do to your business if you have someone that is currently classified as exempt but makes under this new threshold?
If the person doesn’t work overtime at all, this will have no impact on your business.
If the person doesn’t log in and out, they will need to starting on July 1st because at any time you will need proof of when they worked.
If the person does work overtime, you will need to pay them for it.
What are options you can do to mitigate any issues?
Just agree to start paying overtime and be done with it
Find other people to do the additional work so that the person never can work overtime - and tell them they aren’t allowed to work overtime unless it is approved in advance. You could hire a part time person (we can also help with this)
or see if someone else is underworked that can pick up the duties
Raise their pay over $58,656 and they will not be affected.
As a Side Note:
You might want to re-examine the classification you have for all your employees and make sure the way you have classified them is legal. Even if someone makes over $58,656 - they still need job duties that are considered appropriate to be exempt. The misclassification of employees can carry with it a high fine from the DOL and back pay for years. So please don’t make this mistake.
Homework for You
If I were you, I would print out a list of all employees that are currently classified as exempt and make sure they really pass the “tests” above. Can’t hurt to be sure.
We did record a podcast on this a couple months ago, where we talked about getting prepared for this new final rule and the implications. It is 10 minutes and definitely worth your time:
How Innovative Outsourcing and tHRiving: HR for Small Business Can Help:
One of the best services we perform for our clients is our HR Audit. An HR tool built for small businesses to identify the strengths and weaknesses of their HR. As part of the HR Audit, we look at your classifications and 13 other areas of HR to see where you are at. Pricing for this HR Audit starts at $2,500.
How Leadership Development and Mentorship Programs Can Change Your Small Business
How Leadership Development and Mentorship Programs Can Change Your Small Business
I know CEOs and Business Owners are tired of hearing that salaries and bonuses across the board are skyrocketing. Running the numbers and realizing the weight that has on your small business is a little overwhelming. However, I do think there are free ways to retain and hire and can dramatically affect your organization.
One way that I have seen to Retain and Hire that costs no money is to develop Leadership Development and Mentorship Programs within your organization. Before you roll your eyes and think this is a huge waste of time and money, watch this 2-minute video where I talk about some ideas that we have advised big companies like Delta Airlines and small businesses. Both have had a ton of success:
You know the saying, "It's the thought that counts." Leadership Programs are about creating a space where your employees know they are being invested in. Creating these programs is not a ton of work, and the program can be as big or small as you want it to be. We have seen some companies go all out and put a lot of time and money into "building the program" as a recruiting strategy that we believe does work. Or we have also seen book studies led by managers every two weeks at lunch also work. I think Book Studies with your team is a great place to start. Books like "The Ideal Team Player" (we give this to all of our clients when they start a search with us: Hungry Humble Smart) by Patrick Lencioni or Raving Fans by Ken Blanchard if you are looking for a Customer service type book are two great suggestions for your first book study.
When it comes to Mentorship Programs, younger people are starving for it. I tell this story about my son, Matt Filer, all the time. When Matt graduated from the University of Georgia (Go Dawgs), he had 3 different job offers. One was a sales role with a very established payroll company and one was at a company who offered a Mentorship Program where Matt would spend 15% of his time being developed by two different managers. Matt chose the job with the mentorship program for 25% less of salary. I will say that again: 25% less salary!
Putting these programs together show you CARE about your teams. Do it and watch your retention rise. If you do not know where to start, I am happy to talk to you about this! Here is my Calendly. I do 30-minute consultations, and I love talking about this subject.
Here are a few more things that can help with the HR side of your business:
1. The HR Quiz: If you have no idea where you are at when it comes to HR in your business, we developed an HR Quiz to get you thinking about some areas that we thing are really important. Should only take you 5 minutes and should be worth that time to see where you stand.
Press on image to go to the quiz
2. Our HR Audit: You know you need help with your HR, but you do not know where to start. This is the tool you are looking for! Starting at $2,500, we do a full examination of your HR practices (compliance, retention, talent, compensation, etc.) Link to that is below or you can message me or email me to get started:
Press on image to go to link and get a quote for an HR Audit
3. We love helping companies hire for their office positions. This will continue to be what were best at: https://www.innovative-outsourcing.com/hiringhome
How to Retain Your Staff Better than Other Small Businesses
How to Retain Your Staff Better than Other Small Businesses
Let’s talk about Retention.
If you know me or have heard me speak, you know how passionate I am about how retention in small business can drastically change your bottom line. I talk to a lot of Business Owners and CEOs about retention, and the overwhelming theme is that HR is “soft”, “touchy feely”, or the “only department that does not have to reach a goal or quota.”
I am a Mathematical Economics major. You are probably asking how I got into HR, and that is a fair question. However, that means I love data. So we are going to go over some statistics that disprove that HR “does not affect your bottom line as a small business.”
The stats:
3.7% Unemployment Rate (this is staying for the moment)
47% of Active U.S. employees are “watching or actively looking for new opportunities”
Replacing exiting workers costs .5x - 2x the employee's annual salary. Assuming an average salary of $50,000 that replacement cost translates to between $25,000 and $100,000 per employee.
Obviously, your small business is probably perfect and no one will ever leave your organization. However, 47% is a huge percentage of employees who are looking to leave for a new job and actually admitted to it on a survey. If you combine that with the cost outlined above you will hopefully realize that HR and retention dramatically affect the bottom line of your small business.
Want more stats? Here you go:
- In 2021-2022, a majority of workers who quit their job were asked and they said these were the top factors:
63% - Low Pay
63% - No Opportunities for Advancement
57% - Felt Disrespected at Work
Before you roll your eyes, think for a second about this. Maybe you cannot match the offer that Google just gave your EA. However, there are things that may be considered “touchy feely” or “soft” that can affect your bottom line. And did I forget to mention… a lot of this is free!
So here are the areas of Retention that we are going to focus on the next couple of weeks:
Competitive Salary
Career Path for Employees
Health Benefits, 401k, and PTO
Flexible Hours
Flexible Work Location (some 4-day workweek talk as well)
Unique Benefits No One Else is Offering
Leadership Development or Mentoring Programs
Great Looking Work Environment
That’s the start! Can’t wait to hear your thoughts in the coming week.
In the meantime, here is our Small Business HR Quiz. See where you are at and where you may need some help:
How to Lead Your Team in Economic Uncertainty
How to Lead Your Team in Economic Uncertainty
In full transparency, I posted this blog before to some of our clients. However, we are seeing some signs of this again and I thought it might be useful as a reminder of how to lead your team when times are uncertain.
I do not have the expertise to talk about cash flow management. However, I can talk about what you can do with your team from a leadership perspective. During the pandemic, I told our clients that decisions they made with their employees then will affect what happens the next two years. I will say the same about right now. Here are 4 ways you can lead your team during these uncertain times (or a 3-minute video if you prefer):
1. Communicate Often - This is when you should communicate more than normal as the CEO or business leader. If everything is fine at your company, let your team know that you are not going out of business. If you need to tighten budgets, tell them that. Do not let them hear through the grapevine what is going on at the company. Be direct, share KPIs, and let them hear from you often.
2. Ensure Job Security - If you are not planning on layoffs, tell your staff that as soon as possible. That looming threat often causes people to look elsewhere if they feel there is a threat to their role. Just telling your people that layoffs aren’t on the table (if that is true), will reassure people, and will encourage productivity without the thought of layoffs looming.
3. Show Empathy - The news is very negative out there. I actually recommend just acknowledging that. Tell your team that you know the news is rough and the markets are concerning. Understanding the concerns they might have will be oddly assuring.
4. Be Large and In Charge - Employees want to see their CEO be a leader worth following. People want a leader that has a vision and a plan, and who is not easily rattled by what is coming. They want to feel secure and know that their CEO is in control of the ship. We, as leaders, do not always have all the answers. However, when we are in front of our team, it is time to be confident and lead.
Strategies to Consider:
1. It is a great time to hire - If you are a company that sees no signs of slowing down, now might be one of the absolute best times to find great talent that we have seen in years. The clients we have worked with in the last month are seeing exceptional candidates! Shameless plug - we help small businesses hire. Email me at cfiler@innovative-outsourcing.com
2. Start the preparation for the worst - If you must, figure out a plan with your leadership team around what positions might need to be eliminated if a downturn turns worse. We learned in 2008 that you don’t want to wait on these decisions too long. Have a list of possible jobs that could be eliminated first (and the lowest performers listed), which could be a huge help if we get to that point.
Two Ways We Can Help:
1. There are always HR questions that come up when things are shaky - so please don’t hesitate to call me (30 minutes is always free). Email me to set up a time!
2. The HR Audit is a tool designed for small businesses in any industry to identify the strengths and weaknesses of their HR function.
We evaluate the 14 areas of HR from compliance to retention. We develop an HR strategy to make your employees proud of where they work. Watch the video to the right for more information or visit our HR Audit Page on our website.
Hope this helps and I will talk to you next week!
How to Get the Onboarding Process Right the First Time - Part 4 of 5
How to Get the Onboarding Process Right - Part 4 of 5
Onboarding seems straightforward to most small businesses. So you might be asking yourself the question: "Why is Cindi Filer spending so much time trying to perfect our onboarding processes?"
This statistic should help answer that question:
91% of new hires will determine if they want to start/stay based on how they are onboarded.
You want to get this right... Trust me!! So we will continue from our last onboarding principles:
ONBOARDING PRINCIPLE #2 – Tell Your Company Story
New employees want to know why you do what you do. So spend some time telling them the company story and answering questions like these:
Why and when did the company start?
Who started the organization?
What is the “heart” behind the company?
Is there any special history that the business is proud of?
This could be done in a few ways:
“Hype style” video
In a meeting with the CEO presenting to group
A one-on-one lunch with a leader.
ONBOARDING PRINCIPLE #3 – Get New Team Members Excited to Work at the Company
The new hire will be excited about being at your company if you (as their leader) are excited. That’s it.
Your energy level and excitement for the company (or your lack of it) will show through clearly. Make sure you bring that energy in their first weeks (hopefully forever). Remember, excited engaged employee are more productive so it is beneficial for you to put in the effort and energy!!
ONBOARDING PRINCIPLE #4 – Train New Employees Well and Quickly
Training is important – systematic training. The “follow me and just do what I do” is not the best training approach. Before you hire someone, make sure that you are ready to train well. Have manuals, videos, or team members ready with instruction that is clear and well done. New employees that get poor training typically fail.
A couple more important stats that you should be aware of:
59% of employees report no workplace training! (WOW.)
70% of employees believe they lack the skills needed to do their job.
So, if you train well – you have a huge leg up on your competition for talent!
Our HR Audit
We have an HR Audit, where we discuss your onboarding process in depth and make suggestions that fit your company. We also will evaluate the other 13 areas of HR and give our recommendations. HR Audit Info
How Onboarding Well Can Improve Retention
How Onboarding Well Can Improve Retention
When I ask a client about their onboarding of new employees, they often tell me about their new hire payroll documents. And then I say to them, "What about the other onboarding activities?"
And I get a blank stare...
Just to refresh this statistic from my blog on Pre-boarding:
“Even after accepting a position, 91% are willing to quit within the first month and 93% during the probation period if the job doesn’t match their expectations.” - survey from Robert Half
With that said, let’s take a look at some of my favorite strategies around onboarding new employees:
Your New Goals for Onboarding:
1. Get your new employees super excited - one CEO of a large corporation we created onboarding for said, “I want to make the new hire run through the wall for our company”. They need to be fired up when finished with onboarding.
2. Help your new employees understand the general employment policies and expectations - This should also be company wide, but they need to know the information.
3. Make them feel like they made the correct decision in taking this job - Sounds like it is not your job, but it is.
4. Tell your company story - You want new employees to get behind the mission, values, and history of your small business.
5. Help them to create great relationships - Introduce them to people around the office. Set up lunches for them with different people that will be useful to know.
6. Help them to learn necessary skills - This is the basics, but set them up well to learn the role
7. Help them to know where to go for help and information - If they have questions about anything, they should know the best people to answer them.
Keep in mind the following statistic:
“A strong onboarding process improve new hire retention by 82 percent and productivity by over 70 percent.”
With these new "Onboarding Goals" in mind – think to yourself.
Is this a strength of our company?
When new employees are done onboarding, are they so aligned and ready to go that they hit the ground running with excited anticipation?
If not, let’s get to work. Two pieces of advice:
#1 – The importance of setting aside the time to do onboarding well.
The boss needs to participate and understand the importance of setting aside precious time in the first 2 weeks to do this well. We find that this is a real problem. If a boss doesn’t understand this critical need to onboard well, they just throw them in the job quickly to get work done. They are undermining future productivity without giving onboarding adequate time and attention.
#2 – The boss is the best person to onboard
The boss acts as a quarterback to determine what all is needed and to set up meetings and programs either with HR or alone if no HR exists to make sure all the objectives are met.
We will delve into more onboarding best practices next time!
Here are some links to our website and podcast. If you are a small business with recruiting or HR needs, please reach out to me at cfiler@innovative-outsourcing.com
How to Onboard New Employees Better than Other Small Businesses
How to Onboard New Employees Better than Other Small Businesses - Part 1
“Even after accepting a position, 91% are willing to quit within the first month and 93% during the probation period if the job doesn’t match their expectations” - survey from Robert Half
Hiring is not easy in a small business. You spend time and money getting the right candidates for your organization. You make the job offer to your dream candidate, and they accept. The work is done, right? Wrong.
Now, the real challenge begins – Onboarding New Employees. It is time to make the best impression possible for their first 30 days.
The statistic above didn’t happen five years ago and we need to be paying attention to the onboarding process. Let’s talk about some things we can do to keep the talent that we just hired.
In this series, we will go through our thoughts and advice on the whole onboarding process in small business.
Today, we will talk about Pre-boarding.
This is what you do in between when the offer is accepted and prior to the start date. Here are some ways to ensure your new employee has a great feeling about your company even before their first day:
Day after the offer is accepted – Send something with your logo on it in the mail (a t-shirt, mug, frisbee – anything you have) with a handwritten note from the hiring manager about how excited you are to have this person coming.
3 days after the offer is accepted – Have each coworker (up to 7) email the person in the same morning – with a “we are so excited” email introducing themselves.
5 days after the offer is accepted – Share with them a schedule of their first week of employment including planned lunches with specific people, meetings with peers, time for them to acclimate at their desk, any training they need to go through.
6-8 days after the offer is accepted – The CEO (yes the CEO) calls to tell the person they are excited to meet them. If no one answers, just leave a message and your call back number.
If there will be weeks prior to their start date – keep emailing every Friday – to tell them some things that are going on in the department and giving them some additional information.
In addition to these things, you need to send your new hire paperwork during this time. The new hire paperwork needs to be:
Easy to complete and return (electronic signature only – no faxing required). If it can be done on a mobile device – even better.
Thorough and professional looking – not dripping 6 emails with different docs to handle – but in a one-stop-shop fashion.
If there is any document that is not absolutely required, drop it. Completing too many docs is onerous.
Whoever is sending the new hire docs needs to be pleasant and helpful in verbal and written communication. Use terms like, “thank you for completing so quickly”, “I know your hiring manager is excited to get you started”, and “I love my job here and I know you will too”.
Phone calls when needed should be gracious and helpful. This is not the job for a person who has been at the company for 25 years and is bitter and impatient.
As you look at this information – what are you doing well at your company in this process and what might need to change? Seeing that 91-93% of new hires feel it is fine to quit right away – it is important for you to strategize to get this right.
As always, our teams at Innovative Outsourcing and tHRiving: HR for Small Business can help you and your leadership with a plan to make this world class in your company.
If onboarding is just one area that needs assistance, consider our HR Audit. We will assess your current HR practices and give you a report of what is needed to be successful in the 12 different areas of HR. This service starts at $2,400 and goes up to $4,500 based on size and complexity.
Benefits Needed for Retention and Hiring in Small Business
Benefits Needed for Retention and Hiring in Small Business
In today's job market, offering attractive employee benefits has become more important than ever for small businesses. While salary is certainly a factor, it is often not enough to retain top talent. In this article, we will explore six benefits that small businesses should consider offering to attract and retain employees.
1. Offer Highest Salary in Industry (Responsibly, but not everyone can do this)
While it's true that money isn't everything, offering competitive compensation is important in attracting top talent. If your business is able to offer the highest salary in your industry, this can be a major selling point for potential employees. This means you might not have to focus on other benefits as much
2. Great Health Benefits (No Co-pay, for example)
Health benefits are a key factor in employee satisfaction. Offering great health benefits with little to no co-pay can make your business stand out. It can be a significant expense for small businesses, but it can also be a valuable investment in your employees.
3. Lots of PTO (4 Weeks +)
Paid time off (PTO) is a highly valued benefit for employees, especially younger candidates and employees. Offering four weeks or more of PTO can be a great incentive for employees to stay with your company. Additionally, it can help with employee burnout and improve overall morale.
4. Hybrid Location (1-2 Days a Week from Home)
The pandemic has changed the way many of us work, and a hybrid work model has become increasingly popular. Allowing employees to work from home one or two days a week can be a great way to offer flexibility and work-life balance.
5. Flexible Time (Can Come in 10-6, 9-5, 7-3, for Example)
Offering flexible work hours can be a game-changer for employees. Not everyone works best on a traditional 9-5 schedule, and offering flexibility can help employees better balance their work and personal lives.
6. 5 Hours a Week of Leadership/Skills Development
Investing in your employees' professional development can be incredibly valuable. Offering five hours a week of leadership or skills development can help your employees grow in their careers, while also demonstrating your commitment to their success.
In conclusion, offering competitive benefits is crucial for small businesses to attract and retain top talent. Consider implementing one or more of these benefits to create a more attractive workplace for your employees. By investing in your employees, you can create a more productive and loyal workforce.
Unusual Benefits a Small Business Can Offer to Improve Retention
Unusual Benefits a Small Business Can Offer to Improve Retention
Hiring and Employee Retention are two of the most important aspects of running a successful small business. One of the keys to hiring and retaining top talent is by offering benefits and incentives that go beyond just the typical salary and healthcare packages offered by many small businesses. Here are six examples that we have seen clients of Innovative Outsourcing us to keep employees happy, engaged, and loyal.
1. $100/month to Gym Membership
Offering a monthly stipend for a gym membership is a great way to promote health and wellness among your employees. This benefit not only shows that you care about your employees’ well-being but also encourages a healthy lifestyle.
2. Mental Health Care
Providing access to mental health care resources can be an important retention lever, especially in a world where mental health is increasingly important. Offering employees that the employer will pay for the first three visits for example. Or providing them resources like a mental health help line. This will help ensure that your people are taking care of their mental health, which in turn can lead to increased productivity and engagement at work.
3. Financial Counseling
Providing access to financial counseling can help your employees manage their finances more effectively. This can include services such as budgeting advice, debt management, and retirement planning. When employees feel financially secure, they are more likely to be happy and engaged at work. It also shows that you are taking care of them!
4. Volunteer Days Off
Many employees are looking for ways to give back to their communities. By offering volunteer days off, you are not only providing an opportunity for employees to do good but also showing that you care about their interests and passions.
5. Giving Profit Percentage to Non-Profit
Consider donating a percentage of your company’s profits to a non-profit organization that aligns with your company’s values. This can not only benefit the non-profit but also show your employees that you are committed to making a positive impact in the world, which is especially important to millennials and Gen Z.
6. Yoga/Workout Classes at the Office on Wednesdays
This one might seem crazy and I get that. However, offering yoga classes or workout classes at the office can be a great way to promote wellness and relaxation among your employees. Yoga has been shown to reduce stress and increase productivity, making it a win-win for both your employees and your company.
In conclusion, offering unique retention levers can help you keep your top talent engaged and loyal. Whether it’s through promoting health and wellness, offering financial counseling, or providing opportunities for employees to give back to their communities, these benefits show your employees that you care about them as individuals and not just as employees.
Small Businesses Required to Perform In-Person I-9 Verifications
I enjoy talking about culture, retention, and best hiring practices of HR. However, compliance is an extremely important part of HR, and these new I-9 Regulations will affect small businesses. So this may not be the most exciting newsletter for small businesses, but it is necessary.
The Department of Homeland Security (DHS) and Immigration and Customs Enforcement (ICE) announced that employers in the United States will have until August 30, 2023, to physically inspect the identity and employment eligibility documents of employees whose Form I-9 was completed virtually due to COVID-19 flexibility provisions.
During the pandemic, in-person reviews of employees' original identity and employment authorization documents were deferred. Instead, employers were permitted to conduct virtual or copy reviews of the documents, with the expectation that a physical inspection would occur when normal operations resumed.
Now that flexibility provisions are ending, employers have until August 30, 2023, to perform all required physical examinations of identity and employment eligibility documents for those hired on or after March 20, 2020, whose identity and work eligibility documents were examined virtually or remotely according to the flexibility accommodations. Employers must write "documents physically examined" with the date of examination in Section 2: Additional Information on the Form I-9 or in Section 3, as appropriate.
Employers should consider different scenarios when performing physical reviews, such as the same or different employer representative conducting the review and distinguishing between expired List A or List C documents that require reverification or not. If the employee is not in proximity to the employer, an authorized representative may complete Section 2, and the employer is liable for any paperwork deficiencies in the Form I-9 completed by the authorized representative.
In conclusion, employers in the United States have been given a deadline of August 30, 2023, to complete physical inspections of identity and employment eligibility documents for employees who had their Form I-9 completed virtually due to COVID-19 flexibility provisions. Employers should be aware of the different scenarios and follow the guidelines provided by DHS and ICE.
This was just announced last week, and we do expect final regulations to come out at some point soon. If there are any changes, we will continue to keep you updated.
Sales Pitch of the Day:
The HR Audit is a tool designed for small businesses in any industry to identify the strengths and weaknesses of their HR function.
We evaluate the 14 areas of HR from compliance to retention. We develop an HR strategy to make your employees proud of where they work. Watch the video to the right for more information or visit our HR Audit Page on our website.
How to Lead Teams in Economic Uncertainty
HR Strategy: Leading Teams in Economic Uncertainty
I am hearing from our clients daily about the state of the economy, and the uncertainty in the market. CEOs see some of the signs of 2008, but do not know how to prepare if a recession is looming.
Although I do not have the expertise to talk about cash flow management, I can talk about what you can do with your team from a leadership perspective. During the pandemic, I told our clients that decisions they made with their employees then will affect what happens the next two years. I will say the same about right now. Here are 4 ways you can lead your team during these uncertain times (or a 3-minute video if you prefer):
1. Communicate Often - This is when you should communicate more than normal as the CEO or business leader. If everything is fine at your company, let your team know that you are not going out of business. If you need to tighten budgets, tell them that. Do not let them hear through the grapevine what is going on at the company. Be direct, share KPIs, and let them hear from you often.
2. Ensure Job Security - If you are not planning on layoffs, tell your staff that as soon as possible. That looming threat often causes people to look elsewhere if they feel there is a threat to their role. Just telling your people that layoffs aren’t on the table (if that is true), will reassure people, and will encourage productivity without the thought of layoffs looming.
3. Show Empathy - The news is very negative out there. I actually recommend just acknowledging that. Tell your team that you know the news is rough and the markets are concerning. Understanding the concerns they might have will be oddly assuring.
4. Be Large and In Charge - Employees want to see their CEO be a leader worth following. People want a leader that has a vision and a plan, and who is not easily rattled by what is coming. They want to feel secure and know that their CEO is in control of the ship. We, as leaders, do not always have all the answers. However, when we are in front of our team, it is time to be confident and lead.
Strategies to Consider:
1. It is a great time to hire - If you are a company that sees no signs of slowing down, now might be one of the absolute best times to find great talent that we have seen in years. The clients we have worked with in the last month are seeing exceptional candidates!
2. Start the preparation for the worst - If you must, figure out a plan with your leadership team around what positions might need to be eliminated if a downturn turns worse. We learned in 2008 that you don’t want to wait on these decisions too long. Have a list of possible jobs that could be eliminated first (and the lowest performers listed), which could be a huge help if we get to that point.
Two Ways We Can Help:
1. There are always HR questions that come up when things are shaky - so please don’t hesitate to call me (30 minutes is always free). Email me to set up a time!
2. For the first time in two years, we are having a hiring sale. We are lowering our recruiting fees for the month of April to help small business that might need help during these times. Now’s a good time to get a deal with our fees! Email us if you are interested.
Sales Pitch of the Day:
The HR Audit is a tool designed for small businesses in any industry to identify the strengths and weaknesses of their HR function.
We evaluate the 14 areas of HR from compliance to retention. We develop an HR strategy to make your employees proud of where they work. Watch the video to the right for more information or visit our HR Audit Page on our website.
The 4-Day Workweek: Should You Try?
The 4-Day Workweek: Should You Try?
Are you worried that your employees look anxious and tired? Are you concerned about losing your best employees to higher paying jobs at big companies?
Little Sales Pitch Before You Keep Reading: Looking to consult with someone about your HR needs? We can help with any of your small business needs: HR for Small Businesses
We consult with our clients constantly about the "Hiring and Retention Levers" that small businesses can pull to reel in the best talent for their organization. We suggest levers such as more PTO, schedule flexibility, personalized anniversary gifts, and more to set you apart as an employer. However, there is a new concept that is turning a lot of heads: The 4-Day Work Week.
Before you stop reading this email because a 4-day work week is impossible, I suggest you look at this case study in the UK. Companies are testing out this 32 hour work week hoping to reduce burnout, retain staff and recruit excellent employees. You may call 32 hours part-time, but many companies are calling this full-time and providing regular benefits and PTO. Let's break down the positives and the negatives:
Positives due to case studies mostly done outside of the US
Work satisfaction is up
Work happiness is up
The most shocking: Job productivity is actually up
Without surprise - Retention is up
Negatives:
We don’t know the long-term effect on productivity because the studies are too new
Employees might also be more stressed to get their work done in a 32-hour week
What do I think:
It really depends on your company and what you are hearing from your employees.
A good way to see if it might work for you is to do a test period. Tell your employees that from June to August, everyone will be expected to get their full jobs done, but that the office will close at noon on Fridays. Talk with your leaders first about how this can be accomplished. This will not work for all companies, but it might work for yours.
You will be surprised how excited your employees are with just the 4 hours off. You may even be surprised by how much productivity increases. You also may see less people giving their notice to quit.
I know it is one of the stranger concepts we have suggested, but you won’t know until you try. Sometimes you have to be different to set yourself apart.
Check out recent articles on the study and the articles that are being written right now around this concept:
HR Strategy: The 3 Employee Lists
HR Strategy of the Week: The 3 Employee Lists
Just to preface: I get the opportunity to speak to CEOs, COOs, and Managers all the time about their people because of my HR background. I talk about compensation, benefits, and other important HR issues. However, every time I include "The 3 Employee Lists" in one of my talks, it gets everyone thinking and talking. If you really think through these 3 Lists, I think you can dramatically change your organization. So think through these when it comes to your organization:
List A - The "OH NO! What Happened?" Group: This is what you say when you get a resignation letter from one of your vital team members. If someone is on this list, and they resign, you immediately leave the office and think about closing the company (not really, but kind of). These people embody the values, culture and “spirit” of your company. They “Get it”. They could be the admin or the COO - but they mean a ton to you. When you read this, your mind will go to the people who are so important in you business!
List C - The "WOO HOO Finally" Group: This is what you say when you get a resignation letter from someone on this list. In a kind way... you are very excited. You wanted to let them go and now they are doing it for you. They might be unproductive, or they might produce a lot, but have a terrible attitude that doesn’t work in your company. Everyone in the business talks about how they just don’t fit or they have to work extra to make up for their deficits.
List B - The "Adequate Work for Adequate Pay" Group: This is where most of the people in your organization should live. These people show up to work on time, do quality work, and you pay them fairly for their work. You do not expect them to wow you, but they are good employees. Again, this is where most of the people in your organization live!
Do Something about List A and List C!
For the people you have on your "List C", you have two options:
Develop - invest time and energy into training them to become better in whatever they lack if you think it can be corrected.
Let them go! - this sounds harsh, but these people negatively affect the business or firm. If you choose to keep them on, it will set a terrible example for the rest of your staff
For the people you have on your "List A", you have one option:
Create Individual Retention Plans - Be students of your people and find out anything you can do to make them stay! Have conversations with them often. Make them a priority and spend time making sure they are happy! Might seem like a waste of time, but shame on us if they hand us a resignation letter and we did not do everything possible to keep them!
If you want more detail, here is myself and Matt Filer talking through it on our podcast: HR Ins and Outs for Small Business Podcast
Sales Pitch of the Day:
The HR Audit is a tool designed for small businesses in any industry to identify the strengths and weaknesses of their HR function.
We evaluate the 14 areas of HR from compliance to retention. We develop an HR strategy to make your employees proud of where they work. Watch the video to the right for more information or visit our HR Audit Page on our website.