Great Business Ideas: Perform a Personnel Checkup

Great Ideas for your Small Business: Perform a Personnel Checkup

Business owners used to getting routine dental and medical checkups would benefit similarly by giving their businesses a periodic personnel checkup. The reason: Every year, thousands of unhappily terminated employees sue their former employers. Their complaints, justified or not, cost small business owners mil-lions of dollars in legal fees, emotional distress, and lost productivity. While many problems are easily avoided if you follow the rules governing employment, there are so many complex regulations on the books, it’s tough to keep up.

As her fast-growing public relations firm approached fifty employees, Ellen LaNicca, chief executive officer of Patrice Tanaka & Co., felt she needed expert help. Many state and federal employee regulations kick in at the fifty-employee level, and she wanted to be sure she was in full compliance.

LaNicca turned to Peter Skeie, an attorney and cofounder of The Personnel Department Inc., to sort through the morass of laws she had to deal with. Skeie and his partner, Craig Chatfield, left their jobs at Fortune 500 companies to set up their own human resources consulting service in New York City. (They closed the company in 1999.)

“Peter is part diplomat, part human resources legal counsel, and part troubleshooter,” said LaNicca. “He helped us through the process of restructuring jobs and creating separation packages for employees being let go.”

Skeie helped LaNicca review all the company’s personnel practices, including revising the employee policy manual and job applications. “From the beginning, we wanted to have the best working environment possible,” said LaNicca. In addition to providing traditional medical benefits and flexible scheduling, the firm has a meditation room to help employees “de-stress.”

Skeie said most small businesses aren’t as employee- friendly as LaNicca’s, but they all face similar people problems. “We realized small companies have the same employment liability as Fortune 500 companies,” said Skeie. “We set out to provide that kind of support on an outsource basis.”

He admits that serving entrepreneurial companies was a challenge because smaller employers are reluctant to bring in outsiders. Most are too busy to keep good personnel records, but in today’s litigious climate, they have to keep on the straight and narrow.

“Failure to document problems as they occur is at the top of the list,” said Skeie. “It’s much better to take a half hour and document employee problems, because if you don’t write them down, it’s much harder to defend yourself later in court.”

He said too many small business owners tolerate high levels of poor performance from employees because they don’t know what to do. “Eventually, a straw breaks the camel’s back, and they fire the person,” said Skeie. “But then they get sued because this person who has become accustomed to doing virtually nothing gets fired and wants revenge.”

Not knowing labor law is no defense when an employer gets sued by an irate former employee. Employers are expected to keep up with all the changes and new requirements, but many don’t. “Another mistake made by business owners is having incomplete policies and procedures,” said Skeie. “You can get in trouble if it can be proved there’s been a lack of attention to employment-related issues.”

Plain old management misconduct is another serious problem. “Employers make stupid but innocent mistakes,” he said. “They probably don’t mean anything discriminatory by asking whether you are going to get married and have children, but it’s against the law.”

Here are a couple of books worth checking out to get you up to speed on employment law.

  • Slash Your Workers’ Comp Costs: How to Cut Premiums Up to 35%—And Maintain a Productive and Safe Workplace by Thomas Lundberg and Lynn Tylczak offers lots of practical tips and a clear explanation of workers’ comp regulations (AMACOM; 1997).
  • The American Bar Association Guide to Workplace Law: Everything You Need to Know About Your Rights As an Employee or Employer is written in plain English. It covers a variety of topics from sexual harassment to hiring and firing (Times Books; 1997).

Tips for a personnel evaluation

EVERY YEAR, business owners are supposed to evaluate their employees to rate their performance and productivity, but it’s just as important to evaluate your personnel practices to determine whether or not you are operating your business in a legal and ethical manner.

Here are some tips on getting started:

  • Invest in a consultation with an experienced labor lawyer. Ask him or her to review your job application to make sure it doesn’t violate any state or federal employment laws. (For example, you can’t ask a job candidate how old they are or whether they have kids.) Ask them to review with you the documentation required before you can legally terminate a problem employee.
  • Do you have an employee handbook and a policy manual? Your policy manual should outline things like the company dress code, rules about attendance, employee benefits, and vacation issues. Be as specific as possible to avoid confusion. (You can buy software that provides templates to create these documents.) Circulate copies to everyone and require employees to acknowledge, in writing, that they have read them.
  • Do you have a written policy prohibiting sexual harassment at your company? If not, create one and ask every employee to read and sign a copy of the policy.
  • Encourage your employees to suggest ways to boost morale and improve communication with new policies or changes to existing ones.