Why Small Business Owners Cannot Afford to Neglect the HR Department

Human Resources is one of the most vital contributors to overall company success. The old adage is true. A company is only as good as the people behind it. On this week’s episode of The Playbook, host Mark Collier, business consultant for the UGA Small Business Development Center, is joined by Lisa Rackley, Human Resources SHRM certified subject matter expert at the UGA SBDC. Today, she shares her wealth of information on how businesses can get their arms around the many functions of the HR process that drive that all-important bottom line number higher.

Transcription:

Mark Collier:
Welcome into The Playbook, Lisa.

Lisa Rackley:
Thanks, Mark.

Mark Collier:
All right.

Lisa Rackley:
Thank you for having me.

Mark Collier:
Listen. A lot of companies, they spend a lot of time getting their finances together, their business model together, but they neglect their HR. And as I said in my lead in, your company is only as good as the people behind it.

Lisa Rackley:
That is absolutely correct.

Mark Collier:
All right. Well, you’re a true subject matter expert in HR, and you’ve got a lot of experience and vast background in HR. Share a little bit about yourself and your background.

Lisa Rackley:
Okay. Well, thank you. My true love and passion is HR. I’ve loved it since I decided in college that I wanted to have a concentration in HR with my degree. And I worked for about 20 years in employee benefits, consulting, retirement consulting, disability adjudication, and about five years in corporate HR. And now for the last 15 years, I’ve worked with small business owners helping them with their HR processes and just to get a handle on what they need to do as far as HR.

Mark Collier:
All right. So HR management is an important consideration for small businesses. Give me the top three reasons why you believe that is.

Lisa Rackley:
Well, HR is important because one, you’re managing your people and dealing with your people, and you cannot have a business without your people.

Mark Collier:
No, you can’t.

Lisa Rackley:
HR is an area where some small business owners may get into trouble very quickly if they’re faced with payroll issues and tax issues or perhaps legal issues, discrimination issues. And so there are a lot of components of HR and I just … And the other thing that’s really important about HR is establishing your processes because to me HR is process driven, even though you’re dealing with people. And so you’ve got to have your processes in place to make sure you have your HR function top shape.

Mark Collier:
All right. Well, you deliver a signature service for established businesses at the UGA SBDC called an HR review. And I can tell you firsthand, a lot of my clients have found it invaluable. Share with me what are some of the detailed phases of that HR review, and why is it so important for business owners to engage in one?

Lisa Rackley:
Well, I counted the questions in the HR review this morning, Mark, and it’s over 100 questions in the different areas of HR. And we begin with the organization of your company and talking about an organization chart. We talk about recruiting. What are your recruiting practices? What are your growth plans hiring? Do you have a new hire check list? What are your processes related to HR? As I said, HR covers so many components of your company. The HR review covers, we talk about workers’ compensation practices. We talk about your safety practices. We discuss performance evaluations and compensation structure. And it also covers disciplinary action and measures. It’s a very detailed review. I don’t think of the many times I’ve done this HR review that I’ve ever had a client walk away without at least one thing or maybe five or six that they need to go back and check in their HR practices.

Mark Collier:
No. You’re absolutely right. As a matter of fact, the clients that you have helped me with in terms of HR review, they say it’s one of the most impactful consulting sessions that they’ve had, because as you said, most entrepreneurs, they’re experts on their particular good or service. They’re not experts in a lot of the ancillary things that go along with running a business. And HR as I mentioned earlier, is one of the most critical functions within a business. For small businesses who can’t afford a full-time HR person, what are some other options out there that they can possibly look at? They’re starting out. They don’t have the resources to hire a full-time HR staff.

Lisa Rackley:
Well, the first thing I would do is think about to me a very important component, and if your company is larger, you may split, have a payroll department. But most small business owners don’t. To me, the first thing to focus on is maybe outsource your payroll. However, a lot of small business owners do take on that payroll function through Intuit or QuickBooks or a system, a record keeping system.

Lisa Rackley:
You can outsource your HR functions, align with another company that might be able to handle some of the things that you can’t. If you have a person in your company who might be interested in the HR function, you might if they have some extra a capacity, you might be able to ask them to help you as far as maybe starting with the hiring process. And then the other option is to lease your employees through a PEO or a professional employer’s organization. And in that type of arrangement, you actually choose who you want to hire, but those employees actually belong to that PEO, and they handle everything. And the employees just work, come to work for you every day.

Mark Collier:
That is a great consideration. A lot of small businesses may not know about these PEO organizations that are out here. But I think that sounds like a great option.

Lisa Rackley:
And I think do your research as always, and look at the costing and how much it cost in comparison to handling it and doing it other ways. That’s always a big component of HR, is finding out how much things cost.

Mark Collier:
All right. And also they can reach out to UGA SBDC for HR assistance as well if they don’t have that full-time HR component in-house.

Lisa Rackley:
Absolutely.

Mark Collier:
All right. Onboarding an employee, that’s a big deal. I mean, everything from hiring right or interviewing right, finding good employees and all of the things that go on with that onboarding process to make sure you’re doing it comprehensively and legally. Talk to me. Why is it important for small business owners to have a very detailed onboarding process?

Lisa Rackley:
Well, onboarding actually begins before the person reports to work. Because you want to have … For example, if you’re going to have someone train that new employee, you want to already have your trainer identified and briefed on what you want them to do. If the person is going to have an office or a desk, you want to make sure that they have a phone and a computer on their first day when they report to work. You want to already have a training plan in place. And onboarding is also important because it helps make that person become a part of your team.

Lisa Rackley:
You introduce them to the team. And then another thing is always check on that new employee on the first day. Check back in and say, “How did it go? Do you have any questions?” You just don’t hire are a new employee and put them out there without having a process and going back and checking on them and making sure that they really feel like they’re a part of your team.

Mark Collier:
Okay. Well, processes we keep, we’re using that word over and over again. It’s important, and here’s why. If you don’t have standardized process, what I call three Ps, policies, processes procedures. Employees unfortunately they come and go, and I counsel a lot of my clients always have to protect yourself against the two hits. Either they get hit by a bus or they hit the lottery because either one of those hits and they’re gone.

Lisa Rackley:
That’s true.

Mark Collier:
Back to again, processes, processes. You have those in place. Then if someone quits or one of the two hit events happens, someone else steps in, and those processes and training are right there. Your company keeps operating seamlessly hopefully.

Lisa Rackley:
Right. So I will share with, and Mark knows that I can’t come on this show without talking about job descriptions. And job descriptions are a huge component of an HR function, of the recruiting process, the disciplinary process. They can protect you in case of an audit. And if you’re asked to accommodate under the ADA, you have your job description and can check essential functions. One of the things I encourage small business owners to do is if your job descriptions aren’t updated and you have not updated them post-pandemic, now’s a great time to get your job descriptions back out and get them updated.

Mark Collier:
Another very important lesson I learned from you, those job descriptions not only used for the onboarding, but they’re used for the performed evaluations too as well. That leads a segue to my next question. Performance evaluations and appraisals. What are they, and why are they so vitally important?

Lisa Rackley:
Well, feedback is important to your employees always, whether it’s positive feedback or negative feedback. The performance evaluation to me is a chance for you to sit it down with your employee, evaluate their performance, talk to them about where they want to go in your company, or maybe is there training? What is it? It’s that one time a year, or maybe once a quarter that you sit down with that employee and talk about their performance, how they’re doing. Now, if the performance is … if they’re not forming well, don’t wait until that performance evaluation. If there are performance issues, you want to go ahead and address them as they happen so that you can get them taken care of. But I think the performance evaluation is a very important part of the process and it shouldn’t go away. It should be something you do annually with your employees.

Mark Collier:
Absolutely. This is a tough job market out here. We see a lot of national local stories about how tough it is for employers to find talent at all. Do you have any tips on the recruiting process in a very tight job market? What tips or tricks or good advice could you give employers out here?

Lisa Rackley:
Be creative. Now it’s really hard. If you have employees who will type a testimonial to put on your social media platform, that’s a great way to tell people how great it is to work for your company.

Mark Collier:
That’s a good one.

Lisa Rackley:
If there are things that you can offer by being a small business owner, maybe you can offer flexibility. Communicate why someone would want to come to work for your business or your company. Use your network, reach out. If you know friends, ask your friends. Look, I’m hiring, I’m looking for this type of person. Do you know anyone? Sometimes in some businesses that sign on the door work still. That sign on the door that says hiring now.

Mark Collier:
Old fashioned.

Lisa Rackley:
Old fashioned, yes.

Mark Collier:
All right. Well, good deal. I’m going to ask you to, last question. Look into your crystal ball. What emerging trends do you see in the future for HR in terms of either how HR … What’s the HR of the future going to look like for small businesses out here?

Lisa Rackley:
I think one of the things that small business owners need to think about right now, not even going into the future is looking at your employee, looking at your workforce, making sure you have your employees identified properly as far as an independent contractor versus an employee. Make sure you have your employees classified properly, whether they’re salaried or hourly and not hourly and eligible for overtime. I think now is a good time to look at the workforce. We know that remote work has become important to a lot of people.

Mark Collier:
That’s a big emerging trend. Absolutely.

Lisa Rackley:
Evaluate your workforce and see. Evaluate your jobs and see if that might be something that you’re able to offer. I do think that as we are trending remote or having more flexibility for your employees, if you can, is going to be important.

Mark Collier:
Yeah. Flexibility I think is going to be the key because a lot of businesses now are moving to that hybrid work model. You work some from home, some at the office, maybe some of the third party remote locations. I think you hit it on the head. Flexibility is going to be the key moving forward in the job market. All right. Lisa Rackley, area director at UGA SBDC Macon office. I want to thank you for taking the time to come in and just impart some very important information that all small business owners need to keep their eyes on the HR function because it’s critical. As I said in my lead in, you’re only as good as the people behind you.

Lisa Rackley:
Thank you, Mark.

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