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Business Owners Turn to Alternative Hiring MethodsFor many small businesses, the administrative burdens of hiring, managing and paying employees are just too much to contemplate. As a result, many business owners are turning to alternative methods of hiring staff, including something called the “professional employer organization” or PEO. PEOs are companies that help businesses find and hire people, plus manage such things as health benefits, workers’ comp claims, payroll, unemployment insurance and more. As a business owner, you contract with a PEO to assume these and other responsibilities, allowing you to concentrate on the revenue-producing side of your operations. PEOs establish and maintain an employer relationship with the workers assigned to you and assume many employer responsibilities and risks. Most small businesses are new to the “human relations” or HR field. But one advantage of using a professional employer organization is that they already have experienced HR pros who can handle benefits, payroll, OSHA compliance and just about everything else you will need. By bringing employees into a larger overall group, a PEO can offer your workers benefits such as health insurance and retirement plans that you’d be hard-pressed to deliver on your own. Pre-employment testing is another area PEOs can help. Without a screening process, you risk placing the wrong person in the job, leading to lost productivity and costly turnover. PEOs tailor pre-employment tests to predict loyalty to you as well as success on a specific job. The tests aren’t foolproof, but they can have a big impact. Small business owners often dread the prospect of reading mountains of resumes and conducting interviews for prospective hires. PEOs can reduce this burden and deliver candidates quickly, then handle the paperwork for the new hire. Some PEOs have entire divisions devoted to recruiting and helping small business owners gather information to make the right hiring decisions. Many entrepreneurs who’ve used PEOs credit the choice with helping grow their businesses quickly. The National Association of Professional Employer Organizations (NAPEO) is an excellent source of information and help. The organization’s Web site describes how PEOs work, the benefits of using one and guidelines for selecting one that’s right for your business and industry. Visit the Web site at www.napeo.org. Get Affordable Health Coverage with HSAsAs your small business grows, you may want to offer some type of health plan to protect your own family, as well as keep good employees. But the cost of medical insurance coverage for small business has skyrocketed in recent years, and affordability has become a major problem. Between 2001 and 2005, group health premiums increased by double-digits each year, with the largest increases hitting small business, according to research by the National Federation of Independent Business (NFIB). And the prognosis for ending the cost crunch is poor. Business owners squeezed by premium increases cite the rising cost of health insurance as a top concern. They know that workers value their medical coverage. But as owners they feel trapped, and must either pass along rate hikes or cut benefits entirely. A health plan option first introduced in 2004 offers some measure of hope. Health Savings Accounts, or HSAs, work in IRA-like fashion to cover out-of-pocket medical costs with tax-sheltered money. An HSA is an investment account funded by each individual, with optional contributions from your business. The accounts must be linked to an insurance plan that has a high deductible of, say, $1,000 to $2,500 or more. Money from the HSA pays health expenses until the insurance kicks in. Unspent funds carry over, so the accounts have the potential to accumulate significant balances over years of untaxed contributions and investment gains. And premiums on health plans with high deductibles are more affordable. Employer contributions to a tax-favored HSA are exempt from payroll taxes, and the employee is not taxed either. As medical costs soar, HSAs have become more popular among small businesses. Plan features include these:
The National Association of Health Underwriters, www.nahu.org, has a helpful HSA section on its Web site with basic information on how HSAs work, insurance firms offering plans and how to find an agent. Keep Your Best Employees - Here’s HowLosing a valued employee is something business owners hate to do. As hard as it is for a small business to find and train good people, it’s even more difficult sometimes to hang on to them once they become top performers. Motivated, productive employees can be vital in getting a business off the ground or helping it soar. And the issue of retaining good people is an especially tricky one for a small business. That’s because the number one reason good employees leave is a lack of advancement opportunity—precisely the thing that many small businesses can’t offer. A survey by Robert Half International, conducted by an independent research firm, examined the reasons that “top” employees, those considered good performers by their bosses, left the business. Here’s what they found:
The message for business owners is clear, says Max Messmer, CEO of Robert Half. “Helping top performers reach their goals is essential to keeping them. The best employees are ambitious and may not stay in a job long if it lacks growth potential.” If promotions aren’t an option at your business, you can still find ways to reward extra effort. It doesn’t have to be money. If budgets are tight, consider a more flexible schedule or larger workspace. Praise should be frequent and personalized, but it does not have to be costly or time consuming. A simple thank you note can be an effective motivator. Take the pulse of employee perceptions in your business. Are they happy doing what they do? Ask their opinions on the work environment and changes that might enhance their loyalty. Since your best employee probably carries the biggest load and is least likely to complain, you also should try to avoid employee burnout. Consider bringing in temp help during crunch times as one way to ease the load. And try to make it fun. Boring jobs and boring businesses have more trouble keeping good employees. Motivate Your EmployeesSmall business owners are not always the best employee motivators. They are often so wrapped up in operational issues that “people skills” fall short. If your business already has employees or plans to hire some, these individuals will be critical to your success. And aside from handling all of the legal, tax, insurance and other employer paperwork responsibilities, you also need to learn how to elicit good results from your employees without micro managing every detail of their workday. Most business owners have delegated work to an employee, only to find a finished task or product that’s nothing like what they envisioned. In most such cases, the culprit is simply poor communication. It’s important to have direct contact to make your message clear. Some owners try to save time and manage by email. That works only to a point. But direct contact builds trust and rapport. Establish your business “mantra” and keep repeating it. Don’t assume that everyone involved in the business understands and buys into the mission as you do. After all, you’re the one who created it, not them. They haven’t lived and breathed every detail as you have. Here’s one simple step to make certain you communicate clearly. Instead of asking if an employee understood your instructions, ask what specific steps the person will take to complete the task. That way you can be absolutely certain they not only understood, but also plan to complete the assignment in an appropriate way. Avoid constantly criticizing employees. That hurts morale and can make people less motivated. If you highlight the positive and correct mistakes without getting personal, employees are more likely to deliver what you want. Strive to be a visible manager. Sure, all business owners are busy. But the people who work for you deserve your attention. Carve out some time for one-on-one as well as group meetings. Offer your undivided attention to demonstrate to others that they are a priority in your business. Get Savvy about the Rules of Overtime PayIn good times and bad, employees at millions of small business nationwide are working overtime. But many small business owners may not be totally informed on the issue of overtime pay. The consequences of failing to pay overtime when required, or paying it improperly, can be severe. According to the U.S. Department of Labor’s Wage and Hour Division (WHD), hourly employees must be paid overtime at time-and-a-half for working more than 40 hours in a workweek. Overtime pay may not be waived by any agreement between you and your workers. And over the past several years, the federal government has been stepping up enforcement of wage and hour laws regarding overtime. Particular scrutiny falls on thousands of what the Department of Labor (DOL) considers “low-wage” businesses, such as day care centers, restaurants, janitorial services, health care facilities, motels and temp services. Yet among small businesses, there remains a great deal of confusion about the rules of overtime pay. In general, federal wage and hour rules apply to any business with at least two employees and $500,000 in revenues. But there are exceptions as well as state guidelines that may also apply. One potential pitfall involves salaries for workweeks more than 40 hours. According to DOL, a fixed salary for a regular workweek longer than 40 hours does not eliminate an employer’s obligation to pay overtime. Under Federal rules, however, employers can exempt certain positions from overtime regulations. These “white collar” exemptions include executives and professionals who spend at least 80 percent of their time on duties involving their own independent discretion and not structured work. Federal law does not require extra pay for weekend or night work. Nor is there any provision for double-time pay. Both are matters of agreement between you and your employees. As officials at Paxchex, a payroll firm, note, “Classifying your employees as either exempt or non-exempt is neither exact or easy.” The decision shouldn’t be based merely on job title or whether someone is hourly or salaried. Instead, use job duties as the main factor. The U.S. Department of Labor’s Wage and Hour Division Web site, www.wagehour.dol.gov, has detailed information on federal requirements for overtime, minimum wages, family and medical leave and related topics critical to small business. Look for the “Overtime Pay” section and also the FAQ section that answers questions about when overtime is due, how many hours per day or week employees can work, and what’s considered full- or part-time employment. State requirements and contacts are also listed. Use Temps Wisely to Fill Workload NeedsIf sales are up and you are expanding, you might be thinking of hiring more help. But if you think like many other small business owners, you’ll be cautious about taking on the additional overhead and long-term commitment of more full-time employees. To test the waters, you might want to consider hiring temps until you are sure the growth wave will stick. Now the challenge becomes finding good temp candidates—people with the right skills and who really want temporary work. Small companies, as well as large ones, are relying more and more on temporary workers these days for one key reason: flexibility. According to the American Staffing Association (ASA), there are about 2.3 million temp and contract workers in the U.S., and about 2,100 new temp jobs are being added every business day. For small businesses seeking part-time or temporary help, temp agencies are a good way to go. They handle the sticky parts that you’d rather not deal with, such as advertising, recruiting, paperwork and other chores, leaving you more time to concentrate on other things. You’ll pay for that help, but most business owners find it an amicable trade. If the work is of the type that needs supervision under your direct control, temps are probably better than independent contractors. Your odds of success are best if you use resources and solutions that specialize in placing temporary workers, rather than those that offer it as a sideline. StaffSeek at StaffingToday.net is a useful and free online service that can help you quickly find a temp staffing agency perfect for what you need. The site is run by The American Staffing Association (ASA), an employment industry trade group based in Alexandria, VA. Select your state, the skills you need, including office, clerical, professional, health care, technical and industrial, and the type of arrangement you want, such as temp or temp-to-permanent, and click “search.” StaffSeek will deliver a list of agencies, locations, phone numbers and the types of employment placements they offer. ASA members operate over 15,000 offices nationwide. Another option is Net-Temps.com, a Web site that specializes in placing temporary workers. The “Employers” section lets you post a job, search candidates or request help from staffing specialists. You can search a continuously updated supply of temp job seekers, locally, regionally or nationally. Other leading firms offering temporary staffing solutions for small businesses include KellyServices.com, Manpower, Inc. at www.manpower.com and Olsten Staffing Services at www.olsten.com.
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