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Are You Calculating Holiday Pay Correct?

Are You Calculating Holiday Pay Correctly?I chalk these kinds of posts up to the unsexy side of HR. I’m actually not convinced there is a sexy side of HR, but if there were, this type of talk would definitely not be on it. However, much of our work with small businesses is compliance heavy. With Memorial Day coming up, which always feels like the start of the holiday season for me since there is a holiday every other month or so after it, we thought it would be beneficial to cover some commonly asked questions we receive from our clients about holiday pay. And since we are California based, we will be covering it from not only a federal, but CA perspective as well.

First and foremost, there are no federal or state laws that require a company observe federal holidays or give time off to employees. Obviously, retailers and other companies are open for business during many US holidays and can require employees to work during that time. However, common practice is that most companies in the US do observe at least some of the federal holidays and offer holiday pay for those days.

Second, if a company chooses to allow employees time off for a holiday and pays them for that day, the pay is not considered in the calculation of overtime. Let’s take Memorial Day as an example. An employee may be allowed to take Monday off and be paid 8 hours of holiday pay for the day. If that employee then works Tuesday through Saturday, 8 hours each day, they would be paid 48 hours of pay at their regular rate of pay.

The words to focus on in overtime rules is hours worked. Overtime is calculated for hours worked over 40 in a work week (over 8 hours in a day in California). Since holiday pay is pay provided for hours not actually worked, it is not figured into overtime calculations.

Third, an employer can give holidays off, but choose not to pay. In this instance, the rules are different for hourly vs salaried workers. Hourly workers do not have to be paid for the day, however, salaried workers do. If a salaried worker works any hours during the week of the holiday, they must be paid for the holiday as well.

Fourth, employers can attach conditions to holiday pay. Common conditions are that the employee must work their scheduled day before and after the holiday in order to receive pay for the day off. Any condition can be put in place as long as it is not discriminatory to one group.

Where employers could get in trouble is in having a policy they don’t follow. While there are no laws stating that employers must give time off for holidays or have to pay for that time off, there are cases where employers had a written policy they didn’t follow. If your company has a written policy stating that it will pay double-time to employees who work on a holiday, you need to be sure that is happening.

Finally, holiday observance and pay can be a marketing tool businesses use to recruit. Because it is common place for most businesses to observe the holiday and pay employees for it, one who doesn’t may be behind the curve in attracting the talent it needs. Giving employees time off, whether on the actual holiday or another day in exchange, is a great way to tell employees you care about them as individuals and not just employees.

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How to Be an Innovative Leader

How to Be an Innovative LeaderA few years ago, an HR Department of One leader reached out to see if I could serve as a coach to her over the course of several months to, in her words, “help her be more innovative”. When she and I discussed what she needed, I asked her if being more innovative was her only metric. It was. I then asked her how we would measure that. She had to bring in her CEO to answer. He explained that he thought Susan could use some help in thinking of new ways to do things, in offering new ideas and in being more original with her ideas.

Oh boy.

I then asked a series of questions around the areas of HR he felt like she could be more “innovative”. I asked if he felt like things were truly broken or if he felt like they were running ok, but wondered if there was a more “innovative” way of doing them. He explained that he wasn’t sure, but just thought she needed to be more innovative and was glad I was there to help her do that.

I’m gonna double down on that oh boy.

Innovative is a word we throw around like strategic. Especially in HR. We all want to be strategic. We want to be cutting edge and new. Fast and effective. To be seen as a high contributing member of the team. To do all of that, we think we have to be innovative.

But innovation is like the random kid videos that go viral. You can’t always plan for it. You can try to think outside the box and create new things, but that doesn’t always go as planned.

And what’s more, it isn’t always necessary.

So here’s what we did. I agreed to come in and help the HR leader audit her current practices and, in the process, gain a better understanding of the workplace. Through this audit and time together I would see if there were areas that I thought could use some improvement. If there were we would work on them together or, if they were outside my expertise, I would point her in the direction of something (content, another consultant, technology etc) that could help. That process really sums up my advice for “how to be more innovative”.

First, look at everything you are already doing to make sure it makes sense. Innovative leaders are often questioning whether things could be done better, more efficient or faster. And these questions are always happening. Put your major processes on a “do they still make sense” rotation. Pick a time frame that makes sense depending on how fast your business changes and review the process to ensure it is still the best process.

Second, there is strength in numbers. In the HR community, there are so many people willing to share ideas or help. Consultants and agency recruiters are only able to do what they do faster than others because of the network they have. The groups I am in, whether on social media or in person, and the events I attend (conferences etc) are a constant treasure trove of new ideas. Hearing how others do things always helps me question whether my clients could benefit from changes made. Sometimes, things are running well in a particular area, benefits for example, but then someone in one of these groups will mention a benefit they offer and it will trigger great ideas for my clients. My clients think I’m innovative, but what I really am, is connected. HR pro’s, especially those in an HR Department of One, need to connect with others so they feel they aren’t going it alone.

Third, and maybe the hardest for some, is to constantly be thinking about technology. I have a client who does this well. They are always looking for new and emerging tech to try out to see if it can help them be more efficient. Sometimes it doesn’t work out and they realize they wasted time setting something up that doesn’t work, but in a world where nearly every technology option has a freemium offering, they wasted time and nothing else. HR shouldn’t be afraid to try technology either, and it doesn’t always have to be big technology. HRIS systems and applicant tracking software is great, but so are apps to help you control your email or calendar. Small innovation is still innovation.

The point is, innovation can not be forced. An HR leader is not developing new products for Apple. They are ensuring that a company is legally compliant and that processes and systems are in place for employees to have the best experience possible. Sometimes the solution to these things are simple and that thing that has been working for years is still the best option. It doesn’t hurt to question, consult with others and leverage technology, which may lead to innovative solutions, but pure innovation shouldn’t always be the goal.

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Meet Me in New Orleans! SHRM 2017 Preview

Meet Me in New Orleans! SHRM 2017 PreviewOnce again this year I have the privilege of attending the national SHRM conference as a member of the blog team (squad, krewe, rift raft, whatever you want to call us). My responsibility as a member of this team is to write posts, share updates across social channels and make those not in attendance feel as though they are. I thoroughly enjoy being a part of this team and take the opportunity to share as much as I can while there very seriously.

Considering the niche I am in, I focus my conference experience on content that I find most valuable to small businesses. I try to attend sessions that I feel can apply to any size business or ones that are designed specifically for HR Departments of One. So outside of the general sessions, you can look for updates from me from sessions focused in this area.

Here on the blog we have some pretty cool updates planned leading up to the conference. We published one of two speaker interviews this past Tuesday and will be publishing another in a few weeks. We are also very excited to publish our first ever SHRM Small Business Session Guide. This guide will have our top picks for sessions designed specifically for small businesses.

The guide will be released to our blog subscribers on June 1st and to the public on June 8th.

Also this year I have the honor of joining the amazing speaker lineup on the Smart Stage. Smart Stage talks are 18 minutes in length and are Ted-esque in nature. My topic is Big HR for Small Business. Following my mantra that small businesses can do anything big businesses can do, I will be sharing ideas for accomplishing big business ideas in a small business environment. We will be talking about getting it all done, being everything to everyone and scaling projects to wow your executive team.

If you are attending the conference this year, I would love to meet you. Send me an email, a comment below, a tweet or however you prefer to reach out to let me know you are attending. Part of the fun of the conference is meeting online connections in person….even for this introvert.

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Dear HR Leader: Outsourcing Part of HR Does Not Undermine You

Dear HR Leader: Outsourcing Part of HR Does Not Undermine YouI’m a consultant. There is really no way to get around the title. Christine and I, we consult. I could fancy it up and say that we actually serve as HR Directors for many companies, and that would be true. I could call myself a Chief Human Resource Officer to make it sound more corporate. I could do those things and more but the reality is, I’m a consultant.

I work for myself, own a firm, have clients across all industries none of which have me on their dedicated payroll. I believe that’s the very definition of consultant.

For our direct outsourcing clients, small businesses who have no HR staff of their own, we are hired by the CEO, CFO or in-house council and they have no problem with us being consultants. We also have a great group of HR Managers/Directors who call on us to provide project work, typically around a strategic HR initiative (formal on-boarding programs, rewards and recognition programs, recruiting etc) and they know that we are coming in for a time to help them through this project and they enjoy working with us on it.

But then there’s another group. I don’t often get calls from this group, but when I do I’m often baffled. This group is the HR Leader whose CEO or CFO suggested they call in a consultant to help them through a project or who suggested they outsource part of their HR to a consultant to alleviate their daily workload. This group begrudgingly calls us but makes sure that we know that they don’t think they need our help and are only calling because their boss is making them.

Well that makes me excited to work with you.

Let me be clear. Outsourcing part of human resources or bringing us in to work with you on a project does not undermine your ability. We are not trying to get you fired so we can take over your HR Department. The truth is, if your business is big enough to have an HR leader, it is probably too big for us to handle on a full time basis anyway.

What baffles me most is that a operations leader will give the HR leader the go ahead to outsource part of the HR function, say benefit administration, so that their time is freed up to handle other projects, more high level projects, and the HR leader fights it. Who on earth wants to hold on to benefits administration when they could be working on things that are going to make a real business impact?

I understand there are firms out there who may come in and try to take more and more work just to grow their business and who do try to push the HR leader out and that is a shame. It has certainly taught me how to ensure my marketing, proposals and sales pitches highlight that we are different.

We aren’t a firm who hires people with no HR experiences, gives them a couple of weeks of training, shows them where to look up HR answers and then has them handling clients. We aren’t a PEO looking to take over the entire HR function. Clients can outsource as much or as little of their HR function to us or they can call us in for a one time project and once that is complete we will be on our way.

And we never, ever undermine the HR Leader. Never on purpose anyway and if we do by accident we will own it.

I realize this sounds like a bit of a rant and maybe it is. It just pains me to have someone call and tell me they really don’t want to work with us but are being forced to. I will always refer them elsewhere because that isn’t the business relationship I want. As trite as it may sound, we want to partner with HR leaders and help them as best we can, never undermine or make them feel like their job is being threatened.

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Interview with SHRM 2017 Speaker Dr. Tony Alessandra

Interview with SHRM17 SpeakerIf you have followed this blog for any amount of time you know that one topic I am passionate about is communication. I’ve written about it on numerous occasions, my most popular post being this one all about communication. I speak on it and even did my first DisruptHR talk about it. I firmly believe that many issues in the workplace could be avoided with better and more thorough communication.

SHRM 2017 speaker Dr. Tony Alessandra agrees.

Dr. Alessandra is facilitating a workshop on June 18th, titled: Adaptability: How to Talk so that People Will Listen. I spoke with Dr. Alessandra about this session and wanted to share a few takeaways.

Dr. Alessandra says that the most important thing people will take away from this workshop is how to practice communication. This is a “you had me at hello” moment for me. We are very reactive. We speak before we think. More than that, we speak the way we think without forethought or strategy. Dr. Alessandra is going to teach attendees how to adapt (change) their communication style depending upon the person or situation you are facing.

So important and yet rarely done.

Dr. Alessandra will provide a model that describes the 4 basic communication styles and how to identify each. He takes a “when in Rome” approach to communication which I really like. We should not be communicating based on our preferences but based on the preferences of those we are communicating with.

If I say it once I say it 20 times a week to leaders – let’s figure out how to frame this information in a way that the receiver can hear it. So many misunderstandings could be avoided if the person communicating would have taken a bit of time to think about how they wanted to say what they needed to based on how the receiving individual communicated.

This topic hit home for Dr. Alessandra when he moved from New York to San Diego years ago. He quickly realized that the New York style of communicating did not work well in Southern California. My own experience moving from Chicago to Los Angeles in 2014 reiterates that story well. Whether it be with people from different parts of the country, experiences or personality preferences, everyone communicates differently and using a one size fits all approach will not fly in the long run.

Dr. Alessandra says that his workshop is best for anyone who has to deal with people, so I’m certain any SHRM attendee will get something out of this session. He promises actionable content, stories and group activities that make 4 hours fly by.

Although this is the first time presenting this topic for SHRM, Dr. Alessandra is a noted keynote speaker and member of the National Speakers Association where he is in the Hall of Fame.

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Facebook’s Bereavement Policy and Why Small Businesses Should Follow Suit

FB Bereavement Policy and Small BusinessThere is a certain clarity that comes from life experiences that change who you are. Experiences you know will leave you different and creating a new normal for yourself and your family. Time often muddies that clarity and if we don’t act quickly to apply the lessons learned to every area of our life we forget it’s impact. I applaud Sheryl Sandberg and the entire Facebook team for not only applying lessons learned from major life experiences to their personal lives, but for applying them to policies at Facebook as well. One such policy is their a new bereavement policy. One I’m sure was influenced, at least on some part, after the sudden death of Sandberg’s husband.

I believe these types of policies are where companies put their money where their mouth is. These are the policies that allow us to see if all that culture and engagement talk are just words. Leaders know what to say these days. They know what employees are looking for and often say the right things. Policies like these are where you really see if they mean it or not.

The standard bereavement leave policy is three days. Three days to mourn the loss of someone immensely close to you. Three days to mourn the person who raised you, shared your life with you or who used to call you mom. Three days to say goodbye to the people who you are closer to than anyone else in the world. I realize many businesses allow employees to take more time off but they either use vacation/sick time or go unpaid for those extra days.

And that is where the message gets confusing.

“Your loved one is important to us, but only for three days. After that, you have to figure it out.” Or “We only think you need three days to get over this.” Regardless of whether the company allows the employee to take more than the three days, three days is what the employee will feel the company thinks is appropriate.

And if you have lost a parent, or a child, or a spouse, you know, three days is not enough.

I will admit I am a little raw regarding this topic. I just lost my mother and can’t imagine feeling the pressure to return to work after three days. I live far from my parents and need a full day just to get to them. I would have never been able to handle the stress of going through this trauma with the added pressure of getting back to work.

Further, I know there are going to be times in the coming weeks when I, for lack of better words, have a day. Where what has happened hits me like a ton of bricks and I am unable to put any work in. It’s going to hit my son, father and sister too and they may need me to step away from work and help them through. I know that I will be able to take that time without fear of repercussion.

This should be a simple one folks. This is one of those no-brainer policies that I think we have all just accepted for so long the way it is. Why can’t businesses offer more than 3 days? I don’t know that 20 is the right number for everyone, it certainly was for Facebook, but 3 seems perfunctory.

Of course it isn’t as simple as just changing the policy. This article highlights some important components of the Facebook policy and the culture they have created which support a policy like this.

While I’m not encouraging businesses to implement policies like this without thought and measure, I do think it’s necessary that businesses of all sizes begin to look at policies like this and see if the words they tell their employees align with the policies they hold them accountable to. We proclaim more human workplaces, but often work against ourselves in actually providing them. This policy, often forgotten until needed, is a great place to be a little more human and show employees how much we care about their personal lives and their ability to navigate the balance properly.

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Top 5 Ways HCM Software Supports Your Small Business

Today we have a sponsored post from my friends at Ultimate Software. I mentioned that I joined Ultimate Software at their annual user conference in March. I had the privilege of hearing Adam Rogers, their CTO, introduce new updates, interview Will Smith and share Ultimate’s vision for the future. To say I was impressed with both him and the company would be an understatement. I think you’ll enjoy what he has to say as well.

Guest Post: Adam Rogers, CTO, Ultimate Software

For many small businesses that begin with a small team and a dream, HR responsibilities are managed by a cross-functional manager or sole in-house administrator. This approach suffices for a time, but as your company grows, a more comprehensive and effective strategy is needed. Efficiency is critical for small businesses with limited resources, and the right software streamlines time-intensive tasks while alleviating HR challenges. The result? Your efforts are spent strategically growing your business – not updating spreadsheets.

Affordable solutions are available for companies of every size, and they can make a meaningful difference for you and your employees. How? Here are 5 ways your small business can benefit from HCM technology.

1. Consolidate tactical activities
Time is money, and having key employees completing basic administrative tasks consumes both. Today’s solutions streamline otherwise time-intensive tasks, improving productivity, organizations, and effectiveness. Time and attendance management, payroll, and benefits administration are all easily managed by HCM solutions. Most also utilize direct access for both employees and managers, allowing your people to update their personal data and handle leave balance, leave requests, and approvals without any help or interventions while ensuring your business has accurate real-time information for reporting and compliance.

2. Keep tabs on regulatory compliance
Staying on top of compliance is practically a full-time job. Regulatory requirements vary from county to county, but even small businesses are expected to comply with the unique labor, taxation, insurance and healthcare laws of each. With the rise of “gig economy” and increased popularity of remote workers, it’s never been more critical to have a partner ensuring your legal adherence.

3. Progressive talent management
Acquiring and retaining employees is a crucial aspect of every organization. For many small businesses, this is an unrealized opportunity for improvement with technology. Look for a provider that can manage the complete recruiting experience, onboarding, open enrollment, compensation, performance and succession management, and uses social collaboration tools. Some HCM software even allows you to set specific, measureable goals with your employees, monitoring and reporting progress on an ongoing basis. By capturing various data points and journaling throughout the year, performance reviews become more of an ongoing collaborative process benefiting the employee, manager, and the business.

4. Advanced analytics for strategic development
Data is at the heart of every solid strategy, and compiling, accessing, and understanding actions as a result of that data has never been easier. Advanced reporting and analytics provide rich insight into key workforce metrics such as turnover trends and overtime hours, and predictive analytics can help predict future high performers and flight risks. Some solutions even offer prescriptive analytics, guiding leaders through crucial leadership actions with a variety of fact-based, real-time suggestions. Businesses can also gain invaluable data-based insight into their culture and overall employee experience by employing sophisticated pulse surveys. Using natural language processing (NLP) and sentiment-analysis technology, these innovative additions can decode text-based, open-ended questions and uncover the true voice of employees in real time.

5. Career and personal development
Numerous studies show that people value learning and career development opportunities, and offering ongoing learning stands to benefit employees and businesses alike. In addition to increased satisfaction, performance is likely to improve, as well as the value your employee brings to the role. Look for HCM software with a learning management platform that mirrors how today’s employees prefer to learn – collaboratively and on demand.

HCM technology is an investment, but there are affordable solutions for businesses of all sizes and the result can be truly game-changing. Reduced labor costs, increased efficiencies, and strategic opportunities are perhaps even more important for small businesses than they are for larger ones. I suggest looking for a solution that can grow with you- even if you’re only interested in time and labor management and payroll right now, a centralized HR solution can evolve and adapt as your business, budget, and needs grow.

 

 

 

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Acacia HR is Growing – Please Welcome Christine Kopp!

Christine Kopp and Sabrina Baker

When I started this business I did so not because I really wanted to be a consultant or an entrepreneur, but because I wanted to be a mom. If you have read this blog for a while or heard me speak, you know my story. Cliff notes version: I went on maternity leave with my now 7 year old, was told three weeks before I was to return that I would be laid off. New baby, personality not conducive to being a stay at home mom and living in a city where having only an hour commute was a luxury. So I branched out on my own and 6 years later, here we are.

In those early days I worked very part time. I almost don’t consider the first two years of the business as real because I worked maybe two days a week (not 8 hour days) and dedicated most of that time to my son. I did do a lot of dreaming during those days though and over and over there were two things I would tell my husband about my business.

First, when I hired I wanted to make sure that I gave people the same opportunity I had. The opportunity to build their work around their life and not the other way around. The typical 8-5, M-F, take time off if you need to take your kid to the doctor doesn’t have to, and won’t, apply to this business. Anyone I hire can work when they want, how they want as long as the work gets done. They don’t ever have to worry about taking time off to be with a sick kid or taking a Tuesday off just because they want. On Friday, if their work for the week is done, I genuinely don’t care how they made it happen.

Second, when I hired, I had a list of people I wanted to bring on board. At the top of the list was Christine Kopp. Christine and I worked together at ACCENT Marketing – a call center company. We all have those co-workers who become friends and Christine is one of those people. Before either of us had kids, we vacationed together, traveled for work together and always worked really well together both at work and outside of work.

I’m so happy to announce that with my first hire, I’ve done both of the above. Hired Christine and given her the opportunity to work around her life. She’s busy. She has three girls.

Three girls. Seriously.

I had been thinking of hiring help for a while. The business doubled in revenue last year and quite frankly, this is long overdue. Christine reached out earlier this year asking about something she saw that would allow her to work from home, still be flexible with her girls, but keep her relevant in HR for when she was ready to go back to work. I took it as a sign and pitched the idea of her joining me.

She took the bait.

I was a little worried that she might not. If you’ve ever worked in a small business before, you know that roles are hard to define initially and everyone has to do a little bit of everything. Christine will be an HR Consultant but will be helping me in other areas of the business as well. She is a benefit expert and has worked as a generalist so her experience is very well rounded.

Plus, she is the extrovert that every introvert needs. The one who appreciates the introverts need for alone time, but also encourages them to get out of their minds every once in a while. We balance each other out and that makes for a great team.

Christine joined me last week in sunny CA (she lives in Kansas City) to do a little on-boarding and brainstorming and I’m excited about where this is going. There will be lots more to come from her and about her in the coming weeks.

The business turns 6 on April 19th so look for a formal press release on Christine and more info on the blog, but I didn’t want to wait until then to announce her hire.

You can read her more formal work information on LinkedIn and connect with her on Twitter.

Please send her well wishes and a few prayers – working with me ain’t easy!

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Elevated, Enlightened and Engaged at UltiConnect 2017

Ultimate Software

A few weeks back I shared my schedule for the next few months. It is full of amazing events and conferences. First up was Ultimate Software’s annual user conference, Connections. This event took place last week in Las Vegas.

I have to say, and I’m not just blowing smoke here, I was really impressed. I’m a bit ashamed to say that I didn’t know as much about Ultimate as I should have prior to going. I knew what they did of course, but didn’t really understand the history or the mission of the company. Now that I do, and have seen how their “People First” mantra is not just a nice thing to say, but something they really believe, I really want to learn even more.

If you are unaware, Ultimate’s product is called UltiPro and it is a complete human capital management solution. It offers HRIS, payroll, benefit administration and everything you would expect from an HCM solution. They have been refining this solution for a number of years and one thing I heard from customers last week was that it truly does get better with every new update.

At this conference they rolled out many new solutions including a learning management solution, survey tools and their first foray into artificial intelligence called Xander. The biggest update, at least according to audience applause was from the roll out of the Ultimate app. We all love our apps right?

Before I go on, I know my audience will be asking one question. How small a business can you be to use UltiPro. I’m happy to report that UltiPro extends to all businesses over 100 employees. Considering many software companies look at 250 or above, this is very nice.

Here’s where I think small businesses can benefit from UltiPro. First, much like my services, it is a “grow with you” solution. At 100 employees you may only need, or have the budget for, a payroll solution. Then as you grow you may want to add applicant tracking or benefit administration. Then as your CEO sees how much UltiPro is helping and gives you a greater budget (hey we can all dream right) you can add more and more. From my understanding many of these are select and go features meaning you choose to add the service right on your dashboard and it’s ready to use.

Second, the most common theme from last week was around the relationships customers had with their Executive Relationship Manager (ERM). This is their direct contact for all UltiPro services. One contact. One person to call. One person emailing you. One person. Uno. Eins. Un. You get my point. No calling a customer service line and getting whoever you get so you have to explain your business over and over.

Worth it’s weight in gold am I right?

Especially for small businesses who almost always have unique situations that they get sick of explaining over and over. What’s more, I did not hear one person complaining about their ERM. Now I’m not naive enough to think that doesn’t happen (and I doubt Ultimate is either), but to be at an event of 2900 customers and hear nothing but positive from people I asked directly and those whose conversation I listened in on (read eavesdropping), says something.

Something really positive.

Third, along the same vein, it appears Ultimate really listens to their customers. I think any company who brings their customers to Vegas and treats them the way Ultimate did is proving they care, but from everything I saw, they truly take customer feedback to heart and want to make their product better for you. Not every software company can say this. They even have an onsite code-a-thon where they take customer ideas and code away over the course of 48 hours onsite to make them happen before the conference ends. Pretty cool stuff.

Plus Will Smith (yes, the Will Smith), Tim Urban (hilarious), Carrie Lohrenz (bad ass fighter pilot), real lunches (not boxed) and Maroon 5 (which I missed because mommy duty, but heard it was incredible).

They know how to do it right.

For more specific thoughts about the event you can read fellow bloggers, Tim Sackett and Jeff Waldman’s posts.
What If You Could Predict All Of Your Turnover?
Every Moment Matters
HR Tech Companies Can Also Be Awesome Places to Work
Why Should You Really Care About Technology?

Here’s the deal you guys. I get requests at least once a week from readers asking about software solutions. I refer companies based on a few criteria. They have to have a solution for small businesses, they have to have a solution that fits your needs and can grow with you and I need to know that good people are running the show. Ultimate fits all three of these criteria.

And who knows, maybe one day we’ll convince them to offer something to even the smallest of you.

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We Don’t Negotiate with Terrorists or Make Counter Offers…Usually

counter offers

One of my first clients was a small business who was three months from a massive hiring initiative. They were on the cusp of securing their second round of funding and when that happened, they were going to be doubling in size. They brought me in to create a hiring and on-boarding process that would ensure they hired the best they could during this time of growth. During the project an employee who had been with the company since day one and was very valuable to the team gave notice. While sitting with the CEO this employee’s line manager came in the room to share the news. The line manager wanted to make a counter offer as it appeared the motive for the move was based solely on salary. Without hesitation or any further questions the CEO said, “We do not negotiate with terrorists. Please accept the resignation immediately.”

Both I and the line manager were taken aback. The line manager just stared and then turned to me with that look that you know is a plea for help. I asked the CEO if he could help us understand his reasoning. While I agree that counter offers are a tricky thing and generally my thought is that they shouldn’t be made, I do usually like to fully understand and think through the situation before just saying no. I wondered if he might want to do the same.

He didn’t. He was firm on his answer. The employee’s resignation was accepted immediately. I will never forget the bewildered look on everyone’s face, especially the employee leaving, as he walked out.

Later, after the dust settled, the CEO explained his though process. It was his strong belief that people needed to believe in the business in which they worked. They needed to buy into the mission and company goals. They needed to enjoy their work and feel as though they were making a difference. He was committed to doing everything on his end to make that happen, but an employee had to take some responsibility too. Any employee who was willing to leave for money was not bought in. This employee had been with the company from day one. They had helped build something from the ground up and, the CEO thought, was as mission focused as he was. This was an employee who the CEO had spent a lot of time with. He had cast vision and asked for the employee’s feedback which he took very seriously. He was committed to this employee’s success and thought the employee felt the same. If the employee was willing to leave for money, he clearly wasn’t.

There are lots of “buts” that you could throw at this CEO, but ultimately, I agree with his line of thinking. Small businesses, especially those in startup mode, need employees who buy into the vision even if it’s going to take a lot of work to realize it. Someone who is motivated by money may only continue to be motivated by money. Had the CEO countered, there was no guarantee that six months down the road, another offer would be made for even more that would prompt the employee to want to leave again.

Last week a small business client, not in startup mode, had a highly valuable employee give notice in a similar fashion. Her departure would have left the company in a real lurch. Sure, we could replace her, but the time it took to replace her would have put the company behind. The company decided to counter and she stayed. It was the right decision for them at this time in their business.

The situations, although seemingly similar, were quite different. The first story’s employee was an exempt employee on the path to an executive level position. The second is an hourly worker with no immediate upward mobility opportunities, or demonstrated desire for them even if they existed. The first story was not going to experience a great dip in productivity if the employee left. They would need to replace him, but his work could fairly easily be put on others for the time being. Actually his opening left room for promotional opportunities for others and ended up being a win for the company. The second story would have taken a hit. This was their best employee, in a crucial department and the work could not be split as easily. The time it would have taken to regain lost productivity cost more than the dollars to counter.

In general, I don’t like counter offers. I think that if employees are unhappy enough, or motivated by money enough, to entertain other options, then throwing money at them is only a temporary fix. Having said, that, there are times when it may make sense even if it is only a temporary fix. I think what is important is that small business leaders think through their philosophy on this now, before it happens.

As a part of workforce planning, which all businesses should be doing, conversations need to be had about what would happen if employees were to give notice. Beyond just those you know may be looking or on their way out the door, but those who would absolutely surprise you if they said they were leaving, what would you do about those employees?

Waiting until it happens to think about your stance on it could lead to a rash decision. There is no right answer here and even if you take a stand, it doesn’t mean there won’t be times when you have to reconsider, but at some point in your business it is going to happen. Think now about what you might do.

Does your small business have a policy on counter offers? I would love to hear about it in the comments below.

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