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Every HR Decision is a Business Decision
byBecky Stauffer, MPA, SPHR Penn-Mar Human Services
Why building collaborative relationships between HR, Managers and Executives will minimize business
exposure; so your company can save money, make money, improve processes and procedures and reach
your mission.
Penn-Mar Human Services
$24M Organization, 501(c)3 500 Employees 200+ Adults with Cognitive and Intellectual
Disabilities served. Residential, Vocational, Therapeutic Day,
Community Vocational Placement, Respite, In-Home Supports, Transportation, Life-Sharing, LISS
50 locations, 2 States. $1 M Production
Business Advisory Role:
Employee Departures (Terminations, Resignations)
Employee Injuries (Zero Losses, Lost Time, Injury Management)
Accommodations (ADA, Light Duty, Leaves)
Consult on Investigations Disciplinary Actions Hiring
Getting to know you…
Game Time
You should have a single die You should have a game board When you get to role the dice you count
only the sixes
Roll the dice now If you got a six put a 1 in square 1 If you got any other number put a 0 in square 1
Is this your office?
Is this your office?
Is your HR/Management relationship broken?
Management PERCEPTION
Including the HR Department in meetings is not beneficial “HR always tells me no!”
HR is solely focused on Compliance, Rules and Regulations.
HR fails to understand the mission of the organization.
HR PERCEPTION
Managers keep making the same mistakes!
Management allows “bad behavior” as long as the mission is accomplished.
Management fails to understand how their actions create legal exposure.
Is this your office?
Yes- Roll the die 4 times Put the number of 6s in square 2.
Sometimes- Roll the die 2 times Put the number of 6s in square 2.
No put a “0” in square 2.
Square 2:
Successful Management-HR Relationships
Management has clearly articulated the mission of the organization and current strategic plan.
HR clearly understands management’s needs, wants and objectives.
Management recognizes that people are the primary business exposure and managing people issues are critical to organizational success.
HR has the knowledge, skills and abilities to act as a “business advisor”.
Management uses HR as a business advisor to access risk and develop exposure mitigation and avoidance strategies.
Innovative Thought:
Every HR decision is a business decision…
My role as an “HR Professional” is to advise/consult with Managers and Executives about the risks costs and exposures of their decisions, actions and inactions.
People are your greatest risk!
“I am convinced that the underlying cause of virtually every loss is human error somewhere within the system. Unfortunately, most which can be laid right at the feet of management.” Donald Norris of Norris & Associates
Cost of People
2/3 of business costs are employee related!
How can HR “help” Management make “better” organizational decisions?
Risk Management
The technique or profession of assessing, minimizing, and preventing accidental loss to a business, as through the use of insurance, safety measures, etc.
What risks should you spend the most time, energy, resources on?
Frequency (How often the exposure occurs)
Seve
rity
(D
oll
ars
)
Dog bites
Motor Vehicle Accidents
Unemployment comp claims
Slips, Trips and Falls
Taking away doughnuts on pay day
What are the 4 types of losses your Organization
could suffer?
Types of Losses
Economic Reputation
Internal Reputation External Reputation
Physical Time
Roll the die once for every one you couldn’t list!
Square 3:
Where does the “Business Risk” come from?
List 3 types of “People Disasters?”
Common Understanding of 3 Major Risk Areas.
Product Liability claims: improper design, materials, construction, operation and/or maintenance. (Toyota)
Director's & Officer's Errors and Omissions claims: someone was negligent or failed to pursue due diligence. (Enron)
Employment Practices Liability: improper selection, training, coaching; policy & procedure development; ignoring employee complaints of harassment or discrimination; arbitrary termination procedures.
Toyota- Product Liability Employee Errors Were the Root Cause
BusinessWeek estimates that Toyota is losing $155 million per week as a result of their recent recall and in the weeks leading up to this article Toyota had lost nearly $30 billion in stock valuation. The long-term impacts of the root causes that led to Toyota’s current situation could cost the company hundreds of billions of dollars.
When the organization disproportionately rewarded managers for cost-containment versus sustaining product quality, it created the incentive for everyone involved to ignore the facts and to deny that a problem existed.
All you can eat, gone wrong…
Directors’ and Officers’ Red Lobster's chief is ousted after a crab
promotion loses money. The company's stock closed at $18.75,
down $2.62, the biggest drop in seven months.
Employment Liability
Give some examples:
Types of HR exposure
EEOC Claim- 17% of claims accepted average cost $16,500 and in 2010 there was a 70% increase in claims
Unemployment Claim: $8,000 Worker’s Comp/Employee Injuries $7,000* Turnover – Estimated at 25% of the annual
salary Wage and Hour claims Union Organizing
Do you know the difference between “Administrative”
Employees?Administrative Employee #1 The employee who makes
$455 per week; The employee’s primary duty
must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and
The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.
Administrative Employee #2 Performs administrative and
office support activities for multiple supervisors.
Duties may include fielding telephone calls, receiving and directing visitors, word processing, filing, and faxing. Extensive software skills are required, as well as Internet research abilities and strong communication skills.
Staff in this category also may have the title of department assistant, coordinator, or associate.
Did you know the difference?
No- Roll the die 4 times Put the number of 6s in square 2.
Yes put a “0” in square 2.
Square 4:
Warning !
Under FLSA LPNs should be Hourly (Non-Exempt) not Salaried (Exempt)
FLSA- HUGE EXPOSURE A cursory running of the numbers goes like this:
1. An employer misclassifies three jobs and pays no overtime for three years.
2. The employees each work an average of two hours of overtime per week and frequently work through lunch.
3. The employer retains no time records for the employees.
4. The average rate of pay for each employee is approximately $35,000 per year. Three employees multiplied by 2.5 hours per week, multiplied by 156 weeks, equals 1,170 hours of overtime. At a rate of approximately $25 per hour for overtime, that’s $29,250.
Double that total for liquidated damages, and you’re at nearly $60,000. And don’t forget the employees’ attorneys’ fees (at least $30,000) plus a similar defense cost, and you’re quickly approaching $120,000 — all for misclassifying three employees.
What to do about Exposures? (an issue, a problem, identified risk) Acceptance Avoidance Modification Transfer or sharing
Acceptance
Some risky activities are central to the mission of an organization and an organization will choose to accept the risks.
Avoidance
Stop providing the service or doing the activity because it is too risky.
Modification/Mitigation
Change the activity to reduce the likelihood of the risk occurring or reduce the severity of the consequences. Policies and procedures are an important part
of this risk management strategy because they communicate expectations and define boundaries.
Transfer or sharing
Purchase insurance or transfer the risk to another organization through signing a contractual agreement with other organizations to share the risk (for example, having a contractual agreement with a bus company to transport clients rather than staff driving clients).
Do you have an Employee Handbook/Personnel Policy
Manual?If you’ve opened your Employee Handbook or
Personnel Manual in the last week – Do not roll.
If you’ve never read your Personnel Manual – Roll 4 times
If you don’t have a copy on your desk or within arm’s reach – Roll 4 times
If your company doesn’t have one – Roll 8 times
Square 5:
Management must define when an issue is business worthy…
What’s your CEO/COO’s threshold? $250,000 $100,000 $25,000
What is your Program Manager’s threshold? $10,000 $5,000
What’s your threshold?
What’s the cost of a termination?
An hourly employee making $10.00 hour works for our company for a year… We can’t meet the “willful misconduct
standard”… how much will it cost our company?
A) $2,000
B) $5,000
C) $8,000
D) $11,000
E) $24,000
Is it an “acceptable risk” to fire Fred?
The problem of differing standards…
Employment at Will v. Willful Misconduct
CONFLICT!HR Understanding of Legal
Termination
an act of wanton or willful disregard of the employer’s interests, a deliberate violation of the employer’s rules, a disregard of the standards of behavior which the employer has a right to expect of an employee, or negligence indicating an intentional disregard of the employer’s interests or of the employee’s duties and obligations to the employer.
Management Understanding of Legal Termination
an employment relationship is one in which either party can break the relationship with no liability, provided there was no express contract for a definite term governing the employment relationship and that the employer does not belong to a collective bargaining group.
Unemployment Comp HearingIf you’ve…
Ever served as the non-legal advocate for your organization. 0 rolls
Ever been a witness in a case where you have won an Unemployment Compensation Hearing. 0 rolls
Never been to an Unemployment Compensation hearing. 2 rolls
never been to an Unemployment Compensation hearing because your company just accepts claims a part of doing business. 5 rolls
Other 1 roll
Square 6
Flip flops
Time for a Role Play !
HR Sample Script-What to do about Exposure
(an issue, a problem)?
(Acknowledge) Define the problem (Define Cost) Our annual worker’s comp
premium is ____ (Define Cost) The average cost of an injury is__ (Exposure) Slips, trips and falls is one of the four
leading causes of employee injury, last year____ employees were injured, resulting in _______ OSHA recordables, _________ lost days, ________ days on restriction.
Management Script
How does this issue create exposure? Economic, Reputation, Physical and/or Time
What’s the cost associated with this (a single) exposure? What costs have we already incurred over the last year,
5 years? What’s the likelihood of multiple exposures? What’s the worst case scenario? What’s the best case scenario? What are we going to do about it? Is the cost of fixing the problem more than the exposure?
Management:What do you want to choose?
Acceptance Avoidance Modification Transfer or Sharing
“People who bring problems, should also be bringing solutions.”
EEOC Claims
For the six months that ended April 30, (2010) more than 70,000 people filed claims with the Equal Employment Opportunity Commission saying they had suffered job discrimination, a 60% increase in bias claims compared with the same period a year earlier. Not all of these complainants will sue, but plenty will.
We’ve got a problem with workplace violence…
OSHA says… Workplace violence is any act or threat of physical violence,
harassment, intimidation, or other threatening disruptive behavior that occurs at the work site. It ranges from threats and verbal abuse to physical assaults and even homicide.
One of the best protections employers can offer their workers is to establish a zero-tolerance policy toward workplace violence. This policy should cover all workers, patients, clients, visitors, contractors, and anyone else who may come in contact with company personnel
Among those with higher risk are workers who exchange money with the public, delivery drivers, healthcare professionals, public service workers, customer service agents, law enforcement personnel, and those who work alone or in small groups.
http://www.osha.gov/SLTC/workplaceviolence/
What can we do?
Acceptance Avoidance Modification/Mitigation Transfer or Sharing
What’s Acceptable exposure?
At what level of exposure can you/will you justify “not providing” services to an individual?
Are willing to Avoid the exposure?
What can we do to Modify or Mitigate the exposure?
Work in teams
10 minutes to come up with best ideas to mitigate this exposure…
How can we Mitigate/Modify?
Use HR not only for current exposures but future risk/reward!
Multiple department facilitation Rewards Employee Engagement Expansion, Mergers and Acquisitions Downsizing New Program Initiatives Gap Analyses
Successful Management-HR Relationships
Management has clearly articulated the mission of the organization and current strategic plan
HR clearly understands management’s needs, wants and objectives.
Management recognizes that people are the primary business exposure and managing people issues are critical to organizational success
HR has the knowledge, skills and abilities to act as a “business advisor”.
Management uses HR as a business advisor to access risk and develop exposure mitigation strategies.
Parting thoughts: If you offend people they won’t listen to you! Don’t throw people under the bus. Build political capital You want to know about internal problems and
complaints. (Employees don’t have to use chain of command.)
If you have a problem that you can’t resolve, think about it some more.
Look outside the organization for solutions Take Management to a UC hearing! If your CFO has a CPA, why doesn’t your HR
Professional have a PHR or SPHR?
Contact Information:
Becky Stauffer, SPHR
Director of Human Resources
Penn-Mar Human Services
10709 Susquehanna Trial
Glen Rock PA 17327
Referenced Articles: http://www.litigationandtrial.com/2010/09/articles/trial/news/the-rising-tide-of-employment-discrimination-claims-wo
nt-lift-most-boats http://www.sptimes.com/2003/09/26/State/All_you_can_eat_was_t.shtml http://www.ere.net/2010/02/15/a-think-piece-how-hr-caused-toyota-to-crash/ http://www.dol.gov/whd/regs/compliance/fairpay/fs17c_administrative.pdf http://www.hrhero.com/hl/articles/2008/06/27/overtime-and-wage-lawsuits-potential-liability-for-most-employers/?T
OPIC http://www.lexisnexis.com/community/workerscompensationlaw/blogs/newsheadlines/archive/2010/02/10/pa_3a0
0_-workers_1920_-comp-costs-per-claimgrew.aspx
