You can't hack HR, Finance, and Law

On a pretty regular basis we meet business leaders who are what we would call "business hackers."  This isn't a good thing or a bad thing, but more of a mentality we see in people.  We call them business hackers because they try to hack certain functions of their business.  We think that hacking these functions makes complete sense - up to a point.  When businesses start to grow and the complexities begin to mount, it's time to replace those hacks with legitimate services...or better hacks.  This is where we see most business hackers stumble.

Here's a situation that we see all the time.  A couple entrepreneurs start a business.  They use a common online platform to set up their business.   They have some success and make some money, and then they use a full-service online finance/accounting platform to manage their books. Hey, we've got financial statements. We're a real business!  Success continues and the company then uses an online HR platform to manage their HR function.  The company has duped themselves into thinking that they have Legal, Finance, and HR.  These platforms are getting paid monthly and are never going to be the ones to say to their clients "you've outgrown us, time to find someone new."

But what happens when the business really starts to grow.  What happens if they want to raise money, or convert their entity, or create an investor deck, or terminate an executive, or enhance their culture?  This is when things start to get a little messy.  The 800 number that you usually dial, and the PoliSci grad-turned-business advisor that you usually talk to probably won't be able to answer to your questions.  This is where the breakdown starts.  This is where we advise you to Get Suitless.   Or please just get someone, because you can't hack HR, Finance, and Law.  

As on of our partners puts it so eloquently:  "I can hack law because I practice it daily, I have the law degree, I have the masters in law, and I have the years of experience.  You can't. And that guy on the other end of the 800 number DEFINITELY can't."

Meet this computer, it's your new HR person

I often think about all of these new HR platforms and software programs being rolled out to small businesses.  These programs tout many amazing things like the fact that employers will be able to handle administration with a click of a button, or that insurance/payroll/hr can be automated to the point where you won't need someone in those roles.  I'm actually surprised that these systems don't say that they'll generate top-line revenue for your company (maybe some day they will).

Aside from administration being a total pain in the ass, I do believe that it serves a useful purpose.  Young folks entering into the HR field these days will gain valuable experience filling out forms and documents.  It's not the act of filling out documents, but understanding other crucial elements of "document completion" which includes:

1.  Why the documents are being filled out;
2.  Who requires the documents to be filled out:
2.  Where can I take shortcuts and where can I definitely not take shortcuts;
3.  What happens if the documents aren't filled out the right way;
4.  What are the consequences of an incorrectly filled out form;
5.  What happens in those weird, one-off instances where the system doesn't know what to do;
6.  When an employee signs something and I sign something, what does that really mean?

Here's an example. I used to handle HR administration back in the days of Third Eye Blind and Crystal Pepsi, and one of the things that I did was complete an I9 and go over it with employees.  I knew I9's inside and out, so well in fact that I went to a training session put on by an HR executive and an immigration attorney and left feeling like I could teach class to other HR folks.  It was incredibly informative, but it was put on by a lawyer, and we all know how I feel about lawyers.  I learned a lot of great information at that session. I learned potential pitfalls, what to do in strange circumstances, and even the intricacies of collecting identification documents. I know. I was a nerd.

Fast forward to today, where many companies are using HRIS platforms, benefit systems, and online document completion.  I was talking to friend of mine who owns a small engineering firm about how they complete I9's and he just replied with "The system does it."  The hair on the back of my neck stood up a little, but I didn't bristle.  I then asked how the system handled remote employees.  The response again was "I just click a box and the system handles the rest."   At this point I didn't argue (although I thought about sending him in the direction of the closest Immigration Attorney) but told him to be careful in case he ever has an I9 audit.

I'm not saying that companies need to hire a person just to handle I9's. And I'm also not saying that they shouldn't use I9 software or automation. What I am saying is that anyone signing an I9 should be aware of the proper way to complete the document. They should also be aware of the consequences for not completing an I9 correctly.  Most of the individuals signing I9's don't even realize that they're signing them under the penalty of perjury.  And if things go badly, and a Notice of Inspection hits your mailbox, you better be sure that "The system handles my I9's" is not going to be looked at with any sympathy.

HR needs to figure out business before boldness

The other day I stumbled onto a post on LinkedIn that seems to be making it's way around various HR circles.  After reading the article I figured I'd weigh in on its main argument that HR needs to be more bold.  It's not that I disagree with being bold or that I think being bold is a bad idea, it's just that being bold is a small piece of what HR practitioners really need to be. Sure, HR needs to be risk takers, gutsy, and all of those other exciting words that make your heart pump faster. But at the end of the day, what HR really needs to be is better businessmen and businesswomen.

HR has relied on scare tactics, fear, and "compliance" to push their agenda for too long.  Yes the DOL, EEOC, and all of those other spooky government agencies are huge pains in the ass, but they're a necessary evil. And to be honest, many business leaders look at HR as a necessary evil too.  So stop approaching the HR function in a vacuum; HR is an important component of a business but at the end of the day it exists for the same two reasons that every job in a company exists:  Increase revenue and decrease expenses. Forget that and you should just pack your shit up, leave the office, and go home for the rest of the month (or year).

My advice for those of you who are currently in HR or who plan on going into HR is to sear the following ideas into your brain:

1.  Embrace Bold Finance:   You have to do this in our current business environment.  The minute that we start caring more about being loud and gutsy than about earnings and revenue is the minute that we'll change this heading to Embrace Bold HR. But don't hold your breath. Instead, get a firm grasp of income and expenses. know how to interpret and unpack financial statements, and understand the critical impact that revenue has on a business.  Use your problem-solving brain to learn a little more about A/P, A/R, forecasting, budgeting, and taxes.  Hell, payroll tax should be near and dear to your heart if you plan on being in HR for the long haul.

2. Salespeople are Weirdos:  Weird like a fox.  You may think of salespeople as being flashy, arrogant, fake, or phony.  It's the department that spends money like water, dresses way too nice, and will waterboard their own mother for an opportunity to bump their commission check up by $50. The bottom line is that these folks bring in the dollars that pay everyone's salary, including yours.  Sales isn't easy, and while these employees have greater earning potential than other non-sales employees, they can also be around one day and gone the next.  HR needs to learn how to embrace the sales culture and figure out how to use it to their company's advantage.

3.  IT is Crucial:  I'm not talking about the IT guy down the hall that sets up your computer and spills coffee on your keyboard while he's deleting Spotify from your machine.  I'm talking about Data and Information professionals who can read, write, and understand code.  Valuable IT employees grasp the notion of how software and hardware interact with one another, and you should too. Data is a critical component of business these days. Gathering data, creating data, storing data, securing data, and disseminating data is the lifeblood of business.  As more IT efforts head to the cloud and SaaS platforms, the people who manage these programs and areas will become essential to business (I'm looking in the direction of DevOps and TechOps).  Once you're able to talk intelligibly with these employees you'll be that much better of an HR professional, and you'll be respected a heck of a lot more.

4.  Lawyers are Assholes:  For the most part this is true. I know this because I work with a lawyer almost everyday.  He also gave me permission to write this sub-topic, but he remembered to remind me that his permission wasn't technically legal advice.   Rather than going too far down this rabbit hole let's just all agree that the good Doctors of "Jurisprudence" protect you and your company, and in turn that protects everyones paychecks.  Also, it's very important to recognize that you, as an HR professional are not a lawyer.  There are positives and negatives to this, but never confuse providing FMLA information to an employee as giving legal advice.

5.  Understand Your Business: I don't care if you work for a startup, a public company, a non-profit, or a government contractor.  You absolutely must know and understand how your company makes money, how they spend money, and what goes on in between these two points.  You can't be a good HR professional, a good co-worker, or a good employee if you don't understand how and what real success and failure looks like.  Real success and failure is defined by leadership, and more often than not it comes in the forms of numbers.  So as they say in rap songs, if you don't know you better ask somebody.

When you want to know how your HR job affects the big picture, here's an idea: go ask your boss about what you can personally do to have an impact on the top line and the bottom line.  Then GO DO IT.  If your boss doesn't have an answer for you, then go ask his or her boss.  Ambition goes a long way in this world. And the next time you're feeling bold, take a deep breath, open your web browser, and download a good book from Amazon.

Recruiting like it's 1999

I recently met a great guy who happens to be the CEO of a well-funded startup based in Washington D.C.  This guy was giving me the scoop on his company (a SaaS product that I would guess many in the DC startup scene would know of) and about how innovative they are.  Usually when someone tells me how innovative their company is my eyes glaze over and I slip into a nice daydream.  But as our discussion continued, I started to agree (in my mind) that his product actually is pretty unique.

At some point during our discussion the conversation turned to the topic of recruitment.  I asked this CEO how he was recruiting new employees and he proceeded to list the following websites: SimplyHired, Indeed, Craigslist, and Washington Post.  My jaw almost hit the floor.  In my brain I thought to myself this guy is developing an amazingly innovative piece of software, but he's using recruitment practices that were hot in 1999. These days there are so many ways to be creative and innovative when recruiting new talent.  Using niche job boards, developing referral programs, liaising with Dev programs, sponsoring/attending events, and holding contests are just a few things that come to mind.  The truth is that the best way to find employees who want to help you innovate is by searching for them with innovative recruitment methods.  Sure you can find some good candidates on regular job boards, but that's the exception not the rule.

I encourage startup executives and tacticians to think creatively and find new and exciting ways to tell their story to the right people.  Doing this will connect you with candidates you'd never find on the traditional job boards.  And if you are the individual who is described above, please don't be upset that I shared your story. I'm looking forward to helping you with your recruitment strategy very soon!

OOO Forever: Weighing in on unlimited leave policies

The more startups that we come in contact with, the more we see using an unlimited leave policy to manage employee time off.  Some do it better than others, and the spectrum usually ranges from a loosey goosey scenario where employees can come and go as they please, all the way up to structured unlimited leave policies.

Based on this very unscientific Yahoo Poll, 75% of U.S. internet users think unlimited leave is a "Good idea".  This makes sense since the U.S. has some of the most vacation-deprived workers on the planet.  The chatter surrounding unlimited leave has also been increasing recently as well due to companies like Virgin and Netflix publicly touting the benefits of making unlimited leave available to their employees.  If I were a pilot for Virgin I'd probably take my unlimited leave right when I reached someplace like Bali or Bora Bora, but I digress.  

We decided to take a look at some of the pros and cons of having an unlimited leave policy:

Pros:

• You're sending the message that you trust your employees;
• You convey that you're not like other companies (e.g. you're not stodgy and you don't play by the "corporate" rules);
• Your employees don't have to track their leave, ask for permission, request time off, or fill out any HR forms;
• Your HR person doesn't have to play "bad cop" when employees are taking too much leave;
• You don't have to pay the extra $2500 for your HRIS system's Employee Leave Tracking Module;
• Your company doesn't have to book leave accruals, make leave payouts, or pay out accrued leave balances;
• Your employees don't have to lie to you and pull a Ferris Bueller when they stay home sick.   

Cons:

• Companies may believe that having an unlimited leave policy will magically solve all of their issues related to absenteeism, tardiness, over/under working employees, and work/life balance; 
• The legal ramifications of having an unlimited leave policy is still a relatively grey area still since the notion of unlimited leave has yet to become mainstream (think required payouts in California, the interplay with state and local paid leave laws, discrimination claims, etc.);
• By not tracking leave you won't have a clear picture of who is or is not taking leave, when employees are taking leave, or why they are taking leave.;  
• If you ever want to change your unlimited leave policy, expect this:

We would like to offer a few recommendations if your company decides to implement an unlimited leave policy or if you already have one in place:  1) Make sure that your unlimited leave policy is written down somewhere;  2) Make sure that your unlimited leave policy is communicated to your employees; 3) Make sure that your policy contains processes and procedures in it relating to calendaring, tracking, requesting, and timing - and maybe even some guidelines; and 4) Make sure that you understand how your unlimited leave integrates with statutory leave such as state/local paid sick leave, FMLA, USERRA, and other types of required leave.  

Where HR and Legal Software Ends and Consulting Begins

Automation affords small businesses great power when addressing HR and legal issues. We know, because we run software for our clients that in turn makes our lives easier.

However, these useful tools have their limits when solving many out-of-the-box problems that small businesses face. We've thus dedicated this post to point out the price that many clients pay when using software solutions for HR and legal issues.

1. Software might not provide the security you need.

With many well designed software solutions, we are often shocked at the lack of security afforded to employee and company information. When walking through software with our tech clients--who are admittedly more knowledgeable on the technical aspects of data security--we often notice gaping holes.

For example, do you know that some of the links that software products create to store your employee and company information are simply not secure? In several instances, we've demonstrated software workarounds where sensitive information--financials, SSNs, salary, immigration compliance, tax filings, and employee identification--is only a click away with an open URL?

Moreover, software does not have the professional responsibilities that professionals, particularly attorneys, follow to protect their clients' confidential data? For example, a software program does not afford attorney-client privilege for compliance issues. An attorney does.

2. Software can leave you high and dry when it does not give you adequate insurance

We are fully supportive of the recent advances in technology that are disrupting the outdated insurance brokerage model. However, it rarely makes sense to leave insurance decisions up to an office manager or overburdened CEO. As cheap as most insurance policies are, we almost always find instances where businesses have spared a dime on insurance when better human guidance would provide them needed protection.

3. Employee agreements are often insufficient when an employer uses boilerplate offer letters

From an attorney and HR manager perspective, we are shocked at the gaping risks that employers leave on the table when they cut and paste an employee's name or contractor's name into an existing offer letter or independent contractor agreement. Yes, you're saving a few hundred dollars on lawyer fees by not drafting a unique agreement for each hire. But, you'd be wise to have an HR manager or attorney spend 20 minutes verifying that the agreement fits the proposed role.

This is just one example of a boilerplate document or process that creates risks for employers. We'll save things like employee handbooks, noncompetes, non-disclosures, compensation policies, and non-discrimination polices for another day. Suffice it to say that there is a middle ground between automated materials and partner-level legal drafting. 

4. A missing human touch leaves employees feeling cold

As much as we all think that we can rely solely on digital contact, the human touch still has a big role in the workplace. For instance, how do you bring your employees into your business? Do you simply have them log into your payroll software, fill out some forms, and start working?

While we don't recommend arduous intake processes, we do advocate for a personal touch in some practices. We find that a human approach up front goes a long way for communicating things like workplace culture, expectations, promotion policies, and an explanation of benefits.

We are constantly evaluating our use of technology with a keen eye on what software does best and what where we need to add a human face.

Employee Boozing: Is there a right way?

Whenever I engage with new clients one of the issues I always probe them on is alcohol.  Startups, their employees, and management tend to have a love/hate relationship with alcohol.  Everyone knows that tech startups operate lean and fast with young employees working long, stressful hours.  Companies should think about the following when it comes to their Company's alcohol culture:

• Do you make alcohol available in the office?  Does you have beer in your company refrigerator?  Do you have a separate refrigerator for beer - or even a separate refrigerator for a keg? Does your company have a stocked liquor cabinet?  Are there any rules - written or unwritten - as to when alcohol can be consumed?

• Do your employees have a regular happy hour? If so, what is your Company's contribution to that happy hour? Do you pay for booze for an hour? The whole night? Do you make sure that food is provided with the alcohol?

• If you do have a regular happy hour, is it in your office, your office building, or at a nearby bar/restaurant? 

• Does your Company, employees in your company, or a subset of your employee population have "culture of alcohol".  Do they buy each other beers for a job well done in the office or do they offer to buy shots for one another when they close deals?

Answering these questions should give you a better idea of what your Company's alcohol culture looks like and how your company "uses" alcohol.  Asking your employees these questions will paint you an even better picture of how alcohol fits in to your Company's culture.  In startups (free) alcohol can be a fun part of the culture, but can put the company at risk.  Knowing where your corporate insurance ends, and your bank account begins is always good practice when it comes to company risk.

We advise Owners, Founders, and C-Suite executives to periodically check in on their company's alcohol culture so that they can understand whether it is excessive, whether it adds or detracts from the Company's culture, and what risks it presents to the Company.

Does Your Startup have FOGO?

With all the talk of FOMO these days I figured I'd post something about startpus and their "FOGO".   For those of you that aren't in the know, FOMO means Fear of Missing Out, and apparently Millenials all of the place are experiencing it.  Think of the most recent time where all your friends went to that awesome concert or restaurant, and you weren't able to make it.  That knot in your stomach is "FOMO" and it's real (but there's no pill for it...yet).

Small companies suffer from FOGO or Fear of Growing Older (or Outward) all the time.  Tech startups often operate out of one location, acquire customers in various locations, but are then afraid to expand their company footprint.  This happens to East Coast or West Coast startups who start making tons of money, but only want to hire new employees where they were founded.  So when that Front-End/Back-End/DevOps/Designer unicorn wants to work from his house in New Zealand, or when you're ready to set up shop overseas but don't because you're scared of EU law....that's FOGO! Remote employees?!? Oh no, that's too confusing and troublesome. FOGO!  Bring an Estonian coder to the US, we could never do that?!? FOGO!

I'm here to tell you that while FOGO is real, it's not insurmountable, and it's not the end of the world. The trick is to find the right people who can help you tackle your FOGO and who can help you accomplish your goals, regardless of what/where they are.

Transgender Employees in the Workplace

I've decided to write about Transgender employees and Transgenderism in the workplace because I've seen the topic come up several times over the past few months.  Does this mean that Transgenderism is on the rise or that Transgender employees are asserting their rights more in the workplace? I don't know. But I figured I'd provide some information to employers who find themselves interviewing, hiring, employing, or firing Transgender employees.

The very first thing employers should do is understand what Transgenderism is.  Transgenderism can include individuals who have transitioned to a gender other than what they are born as, individuals who are undertaking a gender transition, or individuals who identify with a gender opposite of what they were born as.   While there are many individual states that protect against LGBT discrimination, the federal government along with 29 other states currently have no laws prohibiting gender identity discrimination. In July 2014 President Obama issued (amended) Executive Order 11478 and 11246 to include gender identity - so if you're a government contractor you should be aware of this. When it comes to federal law, Democrats have been trying to pass ENDA for years now.  If it were to pass, ENDA would protect against LGBT discrimination, but it's not clear if or when this bill will ever become a law.

Whether laws exist or not, you should never discriminate against someone due to their sexual orientation or gender identity.  Doing so could harm your reputation as an employer and have a huge impact on employee morale.  Here are some ways that you can go above and beyond by fostering inclusion and making everyone in your office feel welcome:

• Include in your handbook that gender identity and expression are protected within your workplace;
• If you have a dress code make it gender neutral;
• Consider covering domestic partners under your health plan;   
• Consider publicly supporting an organization like GLAAD or the HRC;   
• Post open jobs to LGBTQ job boards and university groups;
• Document performance and make sure any actions you take can be attributed to that performance; 
• Locate a nearby individual (non-public) bathroom and inform all employees about it.  This is just good practice on so many levels. 

The key word here is Inclusion. Employers should strive to create a workplace where all of their employees can bring their similarities and differences to the company.  These similarities and differences should be celebrated, as you'll never know when they'll contribute or lead to the next breakthrough product or service.

Legal Weed and the Workplace

With Prop 71 going from pot legalization movement to D.C. law, Cannabis could soon be coming to a DC office near you.  On November 4th voters turned out and overwhelmingly supported the initiative (68% approved) to legalize it.  Residents and non-residents will now be able to possess up to two ounces of marijuana and they will be able to grow up to 3 THC-producing Cannabis Sativa plants in their house.  But what does this mean for the workforce and businesses that hire D.C. residents?  Unlike other states where marijuana is legal (Washington State and Colorado) Washington D.C. is situated in a major metropolitan area next to two states that definitely still consider Marijuana illegal.  But not so fast, says Congress, who may end up being the ones to "pass" after others have "puff, puffed".  Additionally, without corresponding legislation and ordinances on how marijuana will  be taxed and sold, there's still a huge grey area in terms of legal weed in DC.

But there are some valid concerns from a business and employer perspective. What happens to an employee who talks about growing Cannabis at their DC home while they're at their Maryland office?  What about individuals who live in DC, and legally consume marijuana, but are given a surprise drug test by their Virginia-based employer?  Or what if you're a Virginia or Maryland employer who has an event or happy hour in DC, only to see pictures of your employees smoking joints or holding (up to two ounces of) marijuana. Also, do the drug policies in your Employee Handbook now conflict with DC law? These are issues that HR departments, legal departments, and risk management departments will have the benefit of unpacking in the very near future.