Promote or Hire?

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I hope that you are finding these what if human resources scenarios helpful. Here is the next one that is very common today:

You need a new person in management.

The first candidate already works for your company. This person is extremely hard working, has the respect of the other employees and is considered a leader. People already come to him to find out how to do a project and look to him to solve the problems.

The second person is straight out of college and just got a degree. However, this person does not have any real work experience. The only job this person has held is working for his father.

In many big companies today, the second person would actually have a better chance at the job and would be offered a higher rate of pay that the first one. Many companies look to get people fresh out of school so they can be trained the company way.

The problem of course is this second person has no work history. You cannot tell if this person will have a good work ethic. You cannot tell if this person is book smart but has no common since. In addition you will have to spend more money training the person.

The problem with many large companies these days is that they will hire from outside the company and pay that person more than someone being promoted from within. That creates a cycle in many industries such as retail where people will leave company A to move to company B because they will be paid better than getting promoted by company A.

In the long run you have a drain of talent and higher training cost because you are loosing good people that should be promoted and hiring unknowns from the outside world. Of course many people will look at this scenerio and go that makes no sense and it doesn't.

Once again this is where smaller and small businesses have an advantage. You do not have the archaic hr systems that make this illogical situation common place. If you have someone in your business that shows the talent for the position then you should promote that person and give them the pay that encourages that person to stay long term.

There will be times when you have no one qualified for the position, then you look to hire from outside. The most important aspect of this situation is to get the best person for the job. The person that will benefit your company and help take you to the next level.

How are you laying off your employees?

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Sadly during these economic times, small and big business owners alike must make the difficult decision to lay someone off. The smaller the company, the more difficult the decision can be. How you handle the situation says a lot about you and your company and could affect how people view you in the future.

There is a right way and a wrong way to deal these situations. Too often businesses will try to avoid paying higher unemployment taxes by avoiding the layoff and using other less ethical means to get rid of employees. I am going to give you some sad examples and one good example of how to deal with the situation. The first couple of situations are just acts of poor management. The other examples are worst as the just tend to be down right unethical.

Some of these examples happened to me personally and others are ones that I am aware of.

The first example happened to me shortly after I was out of college. I was working for a company out of Charlotte, North Carolina that was allied with one of the major automobile manufacturers. The economy was in recession so layoffs were necessary. The main manager of the business was the son of the owner and his wife was the human resources manager. No conflicts of interest there but then again it was a smaller business.

However, as I said the son did not have many leadership skills and was in the position because of his father. When the time came to lay off employees he did not have the guts to actually face the employees and tell them. Instead he made one the employees who was not being laid off and not in a real position of management to do the dirty work while he and his wife watch from a corner office. If you need to lay off an employee have the decency to do it yourself and do not make someone else do your dirty work.

The other incident actually made headlines when a major retailer laid off a large number of employees a few years back. However, the company got plenty of bad publicity in the way they handled the situation. Instead of telling the employees directly that they were being laid off the company sent them all email notices that they not longer had jobs and were to leave the building immediately. At the same time police officers came into the building to escort them out. Not a good way to handle a lay off.

While the first two examples is nothing but cowardliness and poor management, the rest of the examples are just outright unethical.

At a Oregon photography store, a person is hired to be a manager when the company opens the new store. However, what this person does not know is that he is only being hired until the owners son's best friend can take over the store and run it. After about a month the person walks into the store to buy some stuff on the persons day off to see the friend in the store. The son's girlfriend sends him to the backroom while the employee is told he no longer has a job. To top it all off they are late getting the last check to them and refuse to return some important contact information.

In another situation two locally owned security companies located in the inland northwest region of Washington & Idaho were merging. The company taking over the other promised to bring on a couple of long time employees of the other company which meant that they had to get rid of one of their employees. To avoid paying higher unemployment taxes the company spent several weeks trying to make this employee leave by making this employee feel as though the employee could not do the job. In the end they called the person and told him he was fired because of a customer complained that he followed company procedures on dealing with an alarm situation. It just happened the employees from the other company started that day.

Finally there was a employee working for a retailer and he was transferred to another state with a written agreement that if this person stayed for one year the company would move him to another location. However, new management was brought in and when the company was about to close down the stores in that region, they fired the employee in an attempt not to pay for his move to another area.

On the other hand I have to give credit to Gateway Computers. When they were suffering from the affects of the Y2K sales slump, they gave the employees the option of either being transferred to another division or getting and severance package. This way the employee had the choice of what they wanted to do.

As I said many of these examples are down right unethical. There is a right way and a wrong way to handle these kinds of situations and the better you handle them, the better your surviving employees will feel about you and your company. The last thing you want your employees that are staying to see is you mistreat the employees you let go.

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Are you too Dependent on Assessment Tests?

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It seems that many company these days are doing assessment test to check the quality of not only candidates applying for jobs in the company but also to see how well a potential employee would be when being promoted. However, it appears that some companies are almost becoming too dependent on them and in some cases taking them as the be all, do all system for evaluating employees. The problem is, like anything assessment tests are not foolproof and if not taken in with other factors could cost the company in the long run.

Let me give you an example I recently dealt with. Two people at a company have applied to be promoted.

Person A is currently a department manager, has a desire to achieve, has good results, is the leader in sales in the store and works with other employees to improve their numbers. This person also has the respect of the staff and this person is one of the first people they come to in the management staff. Not only does this person have the respect of the fellow employees, everyone above this person through the district manager wants to see this person promoted.

Person B on the other hand had to loose their department management position because they could not perform the duties of the job. In addition this person has show no initiative to improve themselves and has no respect among coworkers. In addition this person caused a $1200 loss to the company because of not paying attention to what they were doing. The only reason this person wants to promoted is to make more money. In addition store leadership does not consider this person to be reliable.

Who would you promote in this situation?

Well the assessment test shows that person B should be interviewed by the company for promotion and not person A. Because this is a big corporation that has the habit of running like a dinosaur at times, the company will interview person B but cannot go beyond the assessment tests and promote person A despite the fact they are the better candidate.

Of course the ultimate result will be that there is a good chance that person A will ultimately leave the company by finding a better position with another company possibly a competitor. On the other hand if the company actually promotes person B just because of results from the assessment test, most likely that person will fail at the position and either way, the company loses.

So while assessment tests may give you a look into an employee, you need to have a system sets up that lets you go beyond the results of an assessment test to insure that the right person gets promoted.

Checks and Balances

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If you are a single person operation, you don't have to worry about checks and balances when it comes to finances and your business, but once you hire employees you need to ensure that you have checks and balances as a firewall to an employee robbing you blind.

A couple of weeks ago I talked about an employee that ended up steeling $10,000 from a company simply because they did not check peoples bags as they walked out the door.

Many small business owners do not want employees to think that they are not trusted so they do not put in necessary checks and balances to protect themselves against theft. You need to create a balance between protecting your employees and creating an environment of trust.

Here are some examples of creating checks and balances in your business.

If your company has credit cards (I recommend debit cards), either assign a card to a specific person. If you only have one card to go around, have employees sign the card in and out and if something shows up on the bill that you have no receipt for, you will know who had the card at that time and talk to that person.

Checks should require two signatures to be valid. Another alternative would be to put things such as utilities on EFT so there taken out of your account directly. This will require you to check the bill and make sure there is funds in the account to cover it, but then you are writing fewer checks and there is less chance that one will fall into the wrong hands.

Bag checks are another easy way to deter theft. If your employees know that their bags will be check when leaving the store, they are less likely to put something in there that does not belong. You will need to check the rules in your jurisdiction to see what rules you will have to abide by to avoid costly litigation.

Another big area that is becoming a concern is computer usage. Do you have employees spending more time surfing the web instead of performing important tasks? While this may not be direct theft the employee is still stealing from your business because you are paying them but they are doing personal things on the computer. Computer monitoring software could be a wise investment to insure your employees are doing what they should.

These are just some basic ideas to protect your business. It is not an all inclusive list but hopefully it will give you some ideas to keep money from walking out the door.

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Wages...

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Right now it is not a good time to be an employee for many companies. Many companies out there are cutting wages and other benefits right now using the economic times as a way to cut costs on the backs of their employees.

Many companies have freezed wages, lower starting salaries, and cutting any benefits they can. One of the major retail chain went through and fired all their store employees then required them to reapply for them at lower wages and fewer to no benefits.

Compare that to what a grocery store I shop at has done. They went through and gave EVERY single employee in their store a $2.00 an hour wage to help them out during these tough economic times. Many people seeing that will probably think that this was some PR thing that they did. However, the company has not publicized it because they did it to help out their employees.

If you were an employee, which company would you want to be working for?

Your employees are the biggest assets your company has, yet so many companies just look at employees as a wage cost and don't see the value they bring to the business. Is it any wonder that there is so little employee loyalty?

I am not saying that all employees are perfect and you will have some bad employees, but if you treat your employees with respect and treat them like the assets they are, you will have a better group of employees.

If you want the best employees, you need to treat them like they are.