

Grow Your Small Business Through HR

Christian Cummings

Little HR, Inc.

Go Beyond Compliance

Bring Structure To Your HR

Maximize Your HR

© 2016 Little HR, Inc. All Rights Reserved.

For permission to reproduce any part of the book, contact: christian@littlehr.com.

Visit the author's website at littleHR.com.

First Edition.

Little HR, Inc. provides an HR self-service tool for small businesses. We are not a consulting firm, nor are we lawyers. This book and the content provided herein are simply for educational purposes, and do not take the place of legal advice from your attorney. The topics covered here are a combination of one's professional experience and an examination of material from best practices HR. This book should be considered as general HR advice & guidance and not as legal advice. No liability is assumed for losses or damages due to the information provided. You are responsible for your own choices, actions, and results. You should consult your attorney and/or human resources specialist for your specific needs.

Cover art credit: Sviatoslav Khlynin/Shutterstock.com.

# Preface

littleHR.com is an HR tool developed specifically for small businesses. Built from the ground up, we have been bootstrapping this online tool into something that can help small business owners take control of their human resources and impact their bottom lines. Our professional experience has roots in small business, so we know the environment and we know how it feels when the company struggles to thrive and grow. We want small businesses to succeed, so we have been writing tutorials and HR best practices for years.

It made perfect sense to bind all of this helpful guidance together and make it available to all small business owners. This book is for you: the small business owners who aspire to increase earnings and make more money; the small business owners looking to grow their little businesses; the owner whose company seems to be stuck in a rut, but dreams of making it something great.

Take action, bring it to the next level, break free, and make something of your small business by putting focus on your human resources. This is your largest resource, yet the most misunderstood. This book exists to teach you how to take control of this resource and really start to make things happen. We want you to succeed and your best chance to do so is to conquer your largest and most expensive resource -- your human resources.

## Table of Contents

Section 1 - Beyond Compliance

1-1 Properly Classify Employees

1-2 At-Will Employment

1-3 Policies

1-4 Employees Are People Too

1-5 Terminations

1-6 HR Management Tool

Section 2 - Bring Structure To Your HR

2-1 Pay-for-Performance

2-2 Objectives

2-3 Evaluations

2-4 Monthly Surveys and Performance Trends

2-5 Tie Compensation to Performance

2-6 Release Underperformers

2-7 Profit Sharing

2-8 Structure Your HR By Using littleHR.com

Section 3 - Maximize Your HR

3-1 Treat Your Employees Better

3-2 Recognition

3-3 Employee Engagement

3-4 Motivation

3-5 Empowerment

3-6 How to Coach Your Employees

3-7 Career Path

3-8 Training and Cross-Training

3-9 Promote Top Performers

3-10 Company Culture

Take Control of Your HR and Grow Your Small Business

#  

# Introduction

Welcome to your HR repository of actionable knowledge for you to use as you develop and reassess your human resources. This book is a powerful culmination of strategic and tactical approaches of HR best practices that allows you to turn your human resources potential into a profitable machine. You will find that you will be able to lower your labor costs while boosting your revenue and reach a sustainable level of organic growth. Let's face it, you scrutinize over all your other business resources and metrics; now's the time to take control of your most expensive resource - your human resource.

Many small business owners have a firm grasp on all other resources in their business, but HR remains misunderstood because owners tend to have little or no experience in HR matters and it can be overwhelming. They may know the business needs, how to throw bodies at the problems, and maybe even how to hire and how to fire. Most books on HR do a wonderful job covering compliance issues and risks, but that just scratches the surface. This book may touch on some compliance matters in the beginning, but it goes way beyond. The focus here is how you can restructure your human resources so that you can impact your bottom line and put your company in growth mode. As it is for any resource, it is in your best interest to maximize what you can get out of it. Unlike all those other books, this book will show you how to do it.

Take care of business at home first, and you'll see these results extend beyond your four walls. You will learn how to align and empower your staff, hold them accountable, and build stronger job satisfaction. At the same time, you can identify your top performers and root out the ones not pulling their own weight. You will be able to scale your business by expanding from a team of qualified individuals to large teams of qualified departments.

When it comes to HR, it seems small businesses are left behind. We are passionate about small businesses and we want to see them succeed. It is time to discuss HR best practices and scale them down to suitable action items. At littleHR.com, we hope you can make use of the material in this book and grow your small business.

# Section 1 - Beyond Compliance

Make sure you are in compliance with your human resources, which becomes especially important when you hire and fire employees. We cannot progress into other matters of HR until we have established a solid footing on your responsibilities as a small business owner. This section will go through the classifications of employees, at-will employment, policies you will need, and then introduce the importance of an HR management tool to help bring all this together.

## 1-1 Properly Classify Employees

How you classify employees can have a big impact on how they report to you, how they complete work and get results, and how they are paid. This is a very important area of compliance, and it is often overlooked. Be sure to visit the U.S. Small Business Administration for greater details on employee and hiring compliance: go to sba.gov and click on Starting & Managing.

### Full-time vs Part-time Employment

Do you think you know how many hours an employee has to work to be considered full-time? Are you confident with that answer? This section will take a look at various authoritative organizations to get their take on this question.

#### What makes an employee a full-time employee?

Generally, it is the number of hours they are expected to work each week. Surprisingly, the U.S. Department of Labor does not define full-time employment or part-time employment with regard to the Fair Labor Standards Act (FLSA)[1]. Most companies will require full-time employees to work somewhere between 32 and 40 hours per week. The Bureau of Labor Statistics sets the benchmark for full-time employees a little higher, at 35 hours a week[2]. However, the FLSA does require nonexempt employees to be paid overtime whenever having worked more than 40 hours per week. This is calculated weekly and cannot be averaged over a payroll cycle.

Additionally, where it does matter is when you are offering benefits. This is because of the restrictions imposed by the health insurance providers. Even the Affordable Care Act has the requirement to identify full-time employees. Full-time employees are usually offered a compensation package, which includes things like: insurance (health, dental, life), paid time off (vacation, sick), retirement (401(k) plan), and other company-specific perks, ranging from reimbursements (child care, fitness, education) to stock options.

Since it is largely left up to the company to ultimately determine what is full-time employment, be sure to include these details in your employee handbook. You will need to specify how many hours per week full-time employees are expected to work to be eligible for benefits.

#### Why hire full-time employees?

Since the only real distinction for full-time employees is that they are eligible for benefits, the reason to hire them is the same as to why benefits are offered at all. Health benefits are not a requirement for companies with fewer than 50 employees, but it is a characteristic that presumably makes the positions more attractive and easier to fill.

Having full-time employees reporting for work promotes consistency and reliability. Consistency is very important with interactions between employees because expectations are set for availability and scheduling workload. It is also desirable with customer interactions because customers can come to expect uninterrupted engagement. Employees who consistently work the same shifts and are consistently available and ready to work are the most reliable. You can come to count on them to be there when you need them to be.

Loyalty and commitment are other strong attributes tied to a full-time employee. They are more likely to truly represent your company. Full-time employees are what makes and shapes the company. Since they spend so much of their time at your company, they are more likely to make it personal. Contrarily, part-time employees are more likely to walk as soon as the most minor inconvenience is crossed.

Full-time employees are also going to spend more time mastering that learning curve, which makes them more knowledgeable and efficient. Your top performers are more likely going to be full-time employees. More white-collar positions are going to be full-time.

#### Why hire part-time employees?

It may be cost-effective if you need blue-collar labor to get boots on the ground floor. Under the health-care reform act, companies with at least 50 employees are required to provide medical coverage to full-time workers, but that coverage doesn't extend to employees who work fewer than 30 hours per week. Labor is generally lower anyway because retention tends to be shorter with less expertise. That employee type might fit better for companies in some industries, such as fast food, general labor/general help, and low-skill positions.

Perhaps your industry makes it difficult to hire full-time employees. It could be that you need skilled labor, but individual projects generally last a few hours, such as consulting practices like home decor, computer repair, etc.

Additionally, you may attract talent you would have eliminated by hiring only full-time employees. Some talented people may only be available 20 hours a week or have little desire to be hindered by a full work week in an office.

#### Required benefits

Required benefits for all employees include Social Security, Medicare, workers' compensation, unemployment insurance, FMLA and COBRA. Employers and employees each pay their share into the Social Security Administration and Medicare through FICA tax withholding, both paying 7.65% (6.20% Social Security + 1.45% Medicare) of the employee's earnings.

Worker's compensation is an employer required insurance in about half of the states. Check with your state to find out if it is required. Workers' compensation is a form of insurance providing wage replacement and medical benefits to employees injured in the course of employment in exchange for mandatory relinquishment of the employee's right to sue his or her employer for the tort of negligence[3]. If it is voluntary, it may still be a good idea to have, depending on your industry.

Unemployment insurance is set by the State as it covers unemployment benefits for those laid off or fired. Disputes arise depending on how or why the employee was separated from the company. Former employees with behaviors of misconduct will likely be deemed ineligible from earning unemployment benefits. What qualifies as misconduct? An employee that engages in misconduct by willfully doing something that does harm to the company and/or coworkers. For example, revealing trade secrets or sexually harassing coworkers are the most common situations. Other common types of disqualifying misconduct include chronic tardiness, numerous unexcused absences, extreme insubordination, intoxication on the job, and dishonesty[4]. However, actions that result in firing, but do not indicate misconduct include: poor performance because of lack of skills, good faith errors in judgment, inefficient work habits, an unpleasant personality, poor relations with coworkers, or off-work conduct not aligned with the company's interests. Employees fired for any of these reasons will usually be allowed to collect unemployment benefits.

The Family Medical Leave Act (FMLA) requires group health benefits to be maintained during the leave as if employees continued to work instead of taking leave. FMLA applies to private employers with 50 or more employees, and to all public employers. The Consolidated Omnibus Budget Reconciliation Act (COBRA) health benefit covers group health plans sponsored by an employer that employed at least 20 employees on more than 50% of its typical business days in the previous calendar year. Both full- and part-time employees are counted[5].

#### Meal time and breaks are not required

Federal Fair Labor Standards Act does not address break and meal time. However, your State may have these requirements. Check with your State's requirements by going to https://www.dol.gov/whd/state/meal.htm.

### Exempt (salary), Non Exempt (hourly), or Hourly Exempt

Make sure you are tracking time and paying your employees appropriately. There could be some confusion on whether or not your employees are eligible for overtime. This section helps explain the differences in pay requirements.

#### What is an exempt employee exempt from anyway?

Well, those _not_ exempt from FLSA requirements must be paid at least the federal minimum wage for each hour worked and given overtime pay of not less than one-and-a-half times their hourly rate for any hours worked beyond 40 hours each week. Therefore, exempt positions do not follow these pay restrictions.

Some jobs are classified as exempt by definition. For example, "outside sales" employees are exempt, whereas "inside sales" employees are nonexempt. For most employees, however, whether they are exempt or nonexempt depends on how much they are paid, how they are paid, and what kinds of work they do. Employees who are paid less than $47,476 per year ($913 per week) are automatically nonexempt. Employees who earn more than $134,004 per year are almost certainly exempt. Common jobs that are exempt: commissioned sales staff, computer professionals, drivers, loaders, mechanics, farm workers, certain seasonal and recreational establishments, and executive, administrative, professional and outside sales employees. For more information on the Federal Labor Standards Act updates, go to https://www.dol.gov/WHD/overtime/final2016/.

#### What is hourly exempt?

The salary basis pay requirement for exempt status does not apply to some jobs, for example, doctors, lawyers and schoolteachers are exempt even if the employees are paid hourly.[6] Timekeeping may be necessary for billing purposes for executive, administrative, and professional roles. These would all qualify as hourly exempt. They are simply paid on hours worked, which could be less than 40 hours, but they will be exempt for earning overtime pay even if they work over 40 hours in a single week.

### Employee vs Contractor

Depending on your needs, it is sometimes better to hire independent contractors instead of direct-hire employees. There is a distinct difference in the relationship between the company and an employee versus a contractor. The IRS is the first to point this out, so you need to be careful. Both should be considered for filling a need and keep in mind that you may land the best candidate from an agency.

A lot of companies find the hiring process to be challenging, so they will outsource to an agency that can supply a number of pre-screened candidates. Using an agency typically does not cost the company anything. You will pay them the flat hourly rate and they will, in turn, pay a share of that to the employee. For paying $20/hour for an Administrative role to an agency, that contractor may only receive $14/hour. The problem is that because the contractor only gets a share, you may be getting applicants that cannot find a job on their own, perhaps due to a lack of qualifications, or that cannot seem to keep a job. On the other hand, you also have those looking to get a foot in the door at a good company. This is a way for the contractors to try you out just the same as you want to try them out in the position. Some actually prefer to work independently on short-term "projects", instead of working under the scrutiny and command of a company for the long-run. From a company perspective, you are hoping to find those that want to be hired outright after the contract expires.

Temp-to-hire is a great way to get a number of applicants quickly, it is cheaper than advertising an opening, and it is easier to let someone go. If you are lucky enough to find the right fit, then you will want to hire them as an employee. You can consider offering a rate down the middle between the billable rate to the agency and the hourly rate the employee was receiving, if known. In the Administrative role example, perhaps you can offer $17/hour. It will be a raise to the employee and a discount to you. Actually, it may be a wash if you offer benefits because of that overhead, not to mention the employer portion of Social Security and Medicare payroll taxes. Of course, you will want to wait to hire them following the expiration of the contract to avoid a buy-out fee. Typical employment contracts are three months long, but can be longer. If you hire a contractor from the agency sooner, it will cost you, so find out upfront how long the terms are and the buy-out rates. Although some contractors are hired as temporary employees because they are only needed for short-term projects, others will be hired outright if the working relationship works out. You could feasibly hire a contractor for the long-term and blend them in with the direct-hire employees.

Determining the best mix for specialized roles, it may come down to scalability in your business. "If the company can scale its business for growth, it becomes more flexible in being able to accept a large opportunity that comes along by quickly adding more resources (such as independent contractors). This solves the problem of having to turn away work due to limited resources. If the company has a slow month, then managers can easily slim down the workforce and scale back costs."[7] But, before you sign on an agency for filling open positions, you will need to think about your company's expectations and relationship with an independent contractor versus an employee.

The relationship is different depending on hiring an employee versus a contractor. Most have to do with the degree of control and independence. Contractors are generally consultants, who you engage for their expertise, but they provide services through their company, an agency or sole-proprietorship. If your company can control what the workers do and how the workers do their jobs, then they may be deemed employees. Are there controls over how the workers are paid, such as expense reimbursements, office equipment and supplies, etc.? If so, they may be employees. Lastly, if there are any employee-type benefits, such as a pension, insurance, or vacation pay, they will be considered employees of the company in the eyes of the IRS.[8]

There are a number of benefits of hiring an independent contractor, but only if it makes sense to your company. You will get a lot of applicants quickly, but you need to make sure they have the right qualifications and can make the right fit in your company's workforce. And it may only make sense if you can scale staff with demand growth. In the end, just make sure you are clear on the working relationship.

Whichever employment relationship you seek, an employee or a contractor, it all begins with an interview.

### Interview questions you cannot ask

Are you married? Do you have any kids?

These are perfectly acceptable questions to ask in a social setting, but you cannot ask these questions in an interview.

#### Why?

Because questions like these open the door to discrimination. How one conducts themselves in their personal lives should not directly have an impact on the perception of potential performance as an employee.

Think about what is really being communicated beneath the surface. These types of questions may be telling signs of availability or loyalty. Interviews are designed to gather information to determine the level of time and effort the candidate is willing to put in. But there is a line that is crossed when you feel the temptation to pry. The motive becomes sour because the answers to these questions can lead to discrimination when comparing candidates.

#### What are the consequences?

If you ask these questions to a candidate and they do not get selected for the position, they may have an opportunity to litigate under Title VII - Equal Employment Opportunities of the Civil Rights Act of 1964. Their claim would be that even though they were qualified for the position, they believe they were passed due to personal and discriminatory differences.

#### Below are more questions that should be avoided:[9]

\- How old are you?

\- What is your health situation?

\- What is your religious affiliation?

\- What is your political affiliation?

\- What is your sexual orientation?

\- Are you pregnant?

\- Do you have children or plan to?

\- Where are you from?

\- How long have you lived in the US?

\- Where do you live?

\- What is your race, color or ethnicity?

\- Are you disabled?

\- How tall are you?

\- Are you in debt?

\- Do you social drink or smoke?

\- Have you ever been arrested?

Interviews are wonderful because they allow you to exchange a large amount of information quickly, usually on point with the position and the requirements to be successful. As long as the conversation is kept professional with focus specifically on the position, you should be able to quickly identify the candidate that best fits the role.

### Forms Checklist for New Hires

Congratulations, you picked the best candidate for the job and today is her first day. What do you do first? Ah, paperwork... Below is a list of the most commonly required forms that need to be completed by your new hire as soon as she begins her first day. After you get back the completed and signed stack of papers from your new hire, be sure to provide her with copies. It is important for your company's protection to keep these supporting documents on file and it is important to express the following expectations, provide transparency, and avoid violations of any rights.

#### Form I-9: eligibility to work in the United States

This is a required form according to the IRS. Employers (not employees) must complete this form on the new hire's first day. You can get her to help fill out the form for you, although the burden of proper recordkeeping falls to you. Interestingly enough, you are not required to submit this form to the IRS, US Citizenship and Immigration Services, or any other government agency; just retain it for your records. This form is a trigger for you to get copies of identification and validate the information of your new hire. ID copies are usually a driver's license or birth certificate and her Social Security card. Don't skip getting proof of her Social Security number. Note: The Social Security Administration (SSA) offers social security number verification. Go to http://www.socialsecurity.gov/employer/ssnv.htm.

#### Form W-4: employee's income tax withholding

This is a required form according to the IRS. Employees must complete and sign the W-4s. They can submit new ones at any time they wish to make a change to their withholding. Be sure you retain these copies in the employee files. If you are using a payroll system, it could be managed electronically there, as long as there is a transaction history. Since the employer is responsible for holding this document for an employee, it is an important piece of documentation to support the income tax you are withholding.

#### State income tax withholding

This is a requirement for each state that requires income tax withholding. As with the Federal Form W-4, employees are required to complete the forms with a signature. These are also retained in the employee files as supporting documentation.

#### State new hire registration

For each new employee you hire, you are required to register information about that employee with your state's new hire registration system. A  New Hire Registration System is set up in each state. In some states you will have to first register as an employer, then you can register new employees online. According to federal law, this new hire registration must be completed within 20 days of hiring. The primary purpose of this registration is to ensure states can collect child support from workers that are required to pay.[10]

#### Provide notice of workers' compensation coverage

Download this standardized form from your state and provide a copy to your new employee. She may need to sign it showing acknowledgement, depending on your state. This document may be included with the New Hire Registration. As discussed earlier, about half of the states require the employer to have workers' compensation insurance. Even if not required, you may elect to have this coverage in place anyway, in which case, you may need to provide this notice.

#### Consent of background checks

If you have not already done so, it might be in your best interest to have a third-party conduct a pre-employment background check, which consists of a criminal check and a credit check. You will need to get the new hire to sign a consent form for the credit check. This part is required by the Fair Credit Reporting Act. As for the criminal check, you may need to check with your state laws to determine if a decision can be based on a criminal past. For more information on what you can or cannot use for hiring decisions bases, visit  http://www.sba.gov/content/pre-employment-background-checks.

#### Consent to drug testing

Similar to the criminal check, your company policy may require drug testing. Again, be sure to get consent in writing. These can be stored in the employee files for your protection.

#### Consent to video surveillance

Some companies have surveillance cameras throughout the building for security and quality-control monitoring. If you have this set up anywhere in the building, be sure to get all employees to sign this consent form. All of these consent forms are to provide assurance of understanding and to avoid violations of employees' rights.

#### Receipt of employee handbook

If you went through all the trouble to put together an employee handbook, you would want to make sure you put one in front of new hires. Getting them to sign a receipt form adds vested interest in actually reviewing the handbook. More details on employee handbooks coming up in Chapter 1-3.

#### Health benefits applications

If your company offers any benefits (health, dental, vision, supplemental insurance, dependent care, 401K, etc.), be sure to offer these to your new hire. You should want to impress upon your new hires why it is good to work for your company. Life changing/ qualifying events include starting a new job. These forms will be provided by your insurance company. Once signed, you will want to submit them to your insurance providers right away, keep a copy for yourself, and provide a copy back to your new hire.

#### Nondisclosure agreement

Consider putting a nondisclosure agreement in front of your staff. They are working first-hand with your most intimate knowledge of your business. This agreement states that your employees would be legally bound from sharing intellectual secrets. This includes any new innovations or process improvements that the employees create while working for your company. It could also be expanded with a noncompete clause to include acknowledgement that your customers belong to the company and cannot be "stolen". The noncompete would like also include wording on preventing an employee from quitting to become a direct competitor, within a reasonable time frame. If you are interested in drafting a nondisclosure agreement and/or a noncompete clause, you should seek legal advice.

#### Receipt of company-issued equipment, uniforms, and other items

Anytime you issue anything to your employees, you should get them to sign a receipt. This is just sound recordkeeping controls because now you can hold your employees accountable.

This is a general list of documents you should consider getting new hires to complete on their first days of employment with your company. You may have industry-specific forms that need to be added to this list. For more information on the above documentation, go to the Small Business Administration website at sba.gov. Just remember that these forms are supporting documentation as a representation of compliance and they are to be kept on file for your protection.

### The New Guy's First Day

You went through all the work to search, choose the best fit, and bring in a new hire, but your efforts should not stop just yet. As a small business owner, you should also invest time and effort into onboarding her, acclimating her with the business, and beginning on-the-job training. Your aim is to hire for retention, so take measures to make that happen, starting on Day 1.

Onboarding is much more than just filling out paperwork. Whether you backfilled a position or hired into a new position, you should be excited to put your new employee to work. Get the paperwork out of the way quickly. Most importantly, get everything set up ahead of time. You need workspace, a computer, office supplies, an email address, software licenses, etc. Don't waste time after all you went through to get her in the door. On the job training starts now.

Take effort to make her feel welcome, where she can be part of a team and be willing to contribute. You want your employee hitting the ground running. So, be prepared to give a tour of the facility - all of it. Talk about every aspect of your production areas, storage and warehouse, and the departments of your office staff. Be sure to answer questions along the way. Take your time, so you can let her take it all in; it is worth your time because it could provide returns in the near future through new ideas and processes. As of now, you have yourself someone with an outside perspective. Take advantage because you know soon you will be acclimating her into how things are already being done. At the end of the tour, consider introducing her to your key people.

Getting her in front of key people right away is also important because you can learn from someone on the outside looking in, from someone with prior experience. At the same time, you know she will begin learning about your company's processes and why they are done that way. This also shows that you trust your key people, showing a good impression, especially if you hired this person to eventually become a key person for your company.

Sometime later in the morning, before lunch, it may be a good time to give her some space to regroup and get set up in her new work environment. Make sure you announce your plans to treat her to lunch on her first day. A lunch meeting with "the new guy" is a great way to learn more about her personal life, what makes her tick as a person. You come across showing genuine interest in her and you can use this information to further evaluate her fit in the company.

Following lunch, and after getting some work done, it may be a good idea to check up on your new hire again. Keep in mind that communication is key and you want to start off on the right foot. After talking during lunch, perhaps you may want to discuss deadlines, expectations, and the office cadence. These could be for her specifically, her team or department, or for the entire company. Talk about how, when, and why you conduct meetings. These are important as she becomes familiar with the company culture. She would probably like to know when it is encouraged to speak up or when it is best to simply take notes for future one-on-ones. As the small business owner, do you look for people to express themselves in a meeting or do you want to be the doing the majority of the talking? Consider yourself in her shoes for the moment as she tries to smooth out the rough edges when interacting with everyone.

To wrap up your one-on-one, be sure to ask her about what ideas she has in mind from what she has seen and learned on her first day. Remember, you want to tap into that outsider perspective before she becomes assimilated into the collective. Listen closely to the nuance of the ideas. Even ideas that may seem unimportant on the surface may have some merit down the road. Encourage her to be honest in what she has seen. It should be of interest to you to know which direction she may want to take early on. With a little nurturing, your "new guy" may be able to make some real changes around here.

##

##  1-2 At-Will Employment[11]

Employees are generally hired with the understanding that they are employed at-will, which means both the employee and the employer can terminate the employment at any time without consequences. Unless there is an explicitly contracted agreement with signatures, the employment is at-will. However, there is one thing you need to be careful with, though. Beware of wrongful termination.

At-will employment allows you to terminate an employee without just cause at any time for any reason. You can legally terminate someone simply because you feel they no longer fit the company culture, they are not really pulling their own weight, etc. Whatever the reason, they can be released as easily as they were hired. On the other side of the same coin, your employees can quit at any time for any reason. Giving a two-week notice is just a rule-of-thumb and is not a requirement. Either party can terminate the relationship at any time for no reason at all. There are few caveats to consider, though, before firing an employee. Firing someone on an illegal basis and can be categorized as a wrongful termination.

1) The obvious one is discrimination. It is illegal to terminate anyone based on race, color, national origin, gender, religion, age, disability, or genetic information. Anti-discrimination laws prevent this from happening, so it may be wise to justify the termination on a professional level. Remember, you hired them based on equal opportunity employment.

2) You can also get into trouble if you have made any implied promises anytime during the employment. Implied promises are not as cut-and-dry as other illegal termination categories because you may not even realize you did anything wrong. For at-will employment, there cannot be any discussion about the possibility of continuing employment, such as from extended or lifetime employment. Likewise, you cannot guarantee the frequency of job promotions. These promises or mere discussions about probable continuing employment cannot be made during the interviewing process or anytime during the employment. From another perspective, you may find yourself in trouble if you do not provide adequate warning leading up to the termination. Even for at-will employment, you should build a case for justification of a termination.

3) Next, you can also land yourself in legal trouble for breaches of good faith, which may not have been done with the intent to defraud. If you want to lay someone off, but want them to quit so you can avoid a severance payout, then you will likely be held in breach of good faith. Perhaps you simply want to replace the employee with someone who will accept less pay. This depends on your local legislation, but this gray area may come up and haunt you if you are not careful. Do not coerce your employees to leave if you are not happy with them. This will bring you in breach of good faith.

4) Fourth, there may be violations of public policy to consider. If you are considering firing someone because they took some sort of action consistent with civic and social responsibility, then you may be in violation of public policy. This includes employees getting punished for taking time off to vote, attending jury duty, or serving in the military or National Guard. Violations of public policy also protect employees who notify proper authorities of illegal or wrongful activities your company may be doing. Such illegal activities could include an employee filing a workers' compensation claim, citing OSHA violations, or notifying authorities of other illegal activities that would cheat or harm the public, such as environmental or labor law violations.

5) You cannot fire someone for retaliation, for actions such as whistle-blowing. You cannot take retaliation against an employee for whistleblowing because they will be protected by the Department of Labor's Whistleblower's Protection Program or the National Whistleblowers Center. To avoid action against any of these filings, be careful with the timing of the termination and, again, build a case to justify the termination based on professional underperformance.

6) Finally, following the termination, you cannot defame the former employee. By the time you are able to terminate an employee based on legal justification, you are still not allowed to bad-mouth that employee or do anything that would deter that former employee from finding employment elsewhere. That is called defamation. Keep it professional. If he or she uses you as a reference, you should always avoid saying anything based on character or personality traits and focus directly on the performance of the position they were hired into in the first place.

Keep in mind that wrongful termination could cost a lot of money, your company's reputation, and can have a negative impact on all of the other employees. Granted, the burden of proof falls to the employee, but they likely need little evidence to build a case against your company. Your best course of action is to document everything. At-will employment means your employees can quit their jobs without warning at any time and you can terminate an employee without cause at any time. However, due to certain complications, you should consider building a professional case to support the termination based on performance.

## 1-3 Policies

Running a business is a lot easier with policies in place so that everyone shares the same rules. Hold everyone equally accountable at all times. Policies encourage standardization to achieve efficiencies and reduce conflict.

### Do I Need an Employee Handbook?

Yes, you need an employee handbook. Although there may not be a requirement to provide an employee handbook, depending on your state, you need to establish a set of expectations and policies for everyone to follow. "An employee handbook is an important communication tool between you and your employees. A well-written handbook sets forth your expectations for your employees, and describes what they can expect from your company. It also should describe your legal obligations as an employer, and your employees' rights".[12] Your employees want it and you will want to document the company policies for reference. Additionally, you will need something in writing that may potentially protect the company in litigation. Employee handbooks set the rules for anything regarding the employment relationship with the company.

Before you begin playing a game, you need to know the rules of the game. When your employees are hired, one of the first questions following salary is with regard to what is offered at the company. They want to see it documented somewhere. It could be benefits, work ethic expectations, work environment, personal conduct, etc. Your employee handbook not only gives peace of mind to know what is expected, but it also provides an even level set of instructions for all to follow together. Company policies should be shared here so that you can feel confident these policies will be followed.

Now it is time to start writing. But first, check with the Department of Labor at www.dol.gov and/or check with your state to know what can legally be included. Another helpful source is the Small Business Administration. Go to https://www.sba.gov/content/employee-handbooks for more guidance. You may even want to consult with an employment attorney if you are unsure how to start. There are also some templates online that could help get your started. The best advice is to write in clear, concise language that supports your company culture. Include policies that most people would expect to find in an employee handbook:

\- Company history

\- Benefits: health care, insurances, general coverage information

\- Paid Time Off: vacation time, sick time, accrued or granted

\- National holidays and office closures

\- Leave of absence: family leave policies, military leave, crime victims leave, maternity leave, etc.

\- Equal employment and non-discrimination policies

\- Worker's compensation policies

\- Work schedules

\- Pay frequency, overtime policies, direct deposit, etc.

\- Methods of performance evaluations, raises, and promotions

\- Accommodation for disabilities, breast-feeding, etc.

\- Dress code

\- Safety and health notices, OSHA requirements, unions, other regulatory compliance

\- Terminations

\- Expectations of behavior and code of conduct

\- Use of internet, social media, texting, etc.

\- Disclaimers: not a contract, supersedes other policies, subject to change, etc.

\- Signed acknowledgement by the employees

Policies you should not include are those that may violate local and state mandates, employees' rights, or those policies that are unreasonable. If your policy smells even a little contradictory to what a reasonable employee would expect, it probably cannot be included.

Do not over-promise and make sure you can easily follow through with everything you have included in the handbook. Some things that are culturally specific, rules of thumb, or "unwritten rules" should probably stay that way -- not included in the handbook. It is all a balance of what protection the company needs that can support a litigation versus what documented employee obligations the company needs to honor.

Writing the employee handbook is for your company and its employees alike. You can include as much or as little as you want. Soft copies probably work better than distributing booklets because any changes or amendments can be included more easily in digital format. These should be given to a new employee on their first day, right along with filling out all the employment paperwork. Be sure to file the signed acknowledgement. Any considerable amendments should also have signed acknowledgement pages as well.

Do the work and write an employee handbook for your company. They hold tremendous value for the company and its employees in legal support, rights, communication, and understanding. Employee handbooks set the rules of the game.

### Does My Company Need a Dress Code?

As your small business grows, so does your need for a dress code. Startups and very small businesses tend to enjoy the freedom of not having a dress code, which is probably fine because there are fewer people and conversation is generally more open. Then, that company grows, employing more people, getting larger office space; the need for a dress code also grows. But why?

#### Customer-facing

First, your staff represents you and your company. Secondly, 55% of communication is from unspoken action, such as body language, starting with overall appearance. And third, people tend to act relative to how they are dressed. Customers know this too, so they immediately make presumptions before a single word is spoken. How important are your customers' perceptions of your company? The way your staff dresses will impact your customers' expectations, so take measures to set a dress code.

You may want to consider uniforms for your customer-facing service personnel. This will add a perception of professionalism for both your customers and for you service team. Employees ultimately want to represent something great, something they could be proud of. When people feel they are representatives of something, that builds a sense of importance because others are relying on them. They will be proud to stand for something, whether it is telling their families they are professionals, they feel they can back a brand, or they feel consistency of quality in their own work. Uniforms will enhance employee performance.

Proper attire may be necessary for protection on the job. Be sure to consider the physical dangers your employees may get into. You certainly want to limit worker's compensation claims.

#### Professionalism

The people at work are the ones you see most every day, but with a business relationship. The way you dress needs to be appropriate to the situations and the environment. To uphold these relationships with these people, who are not necessarily close friends or family, you should feel the desire to dress as a professional. Proper dressing and grooming shows respect for each other in the office. You act the way you dress. So, if your staff takes liberties in their attire, they are likely to act anything but professional and that may be a cause for concern. Consider setting a dress code for non-customer-facing employees as well. Even for employees in supporting roles who do not see customers, they will accept a dress code.

#### Policy

Your office might function better with an employee handbook. Dress codes are key components of handbooks as it helps introduce new employees with behavioral expectations in the office. How your employees dress may depend on your industry. You may consider a different dress code for each department. Operations may require uniforms different from field service employees who are customer-facing. Office staff in the back office may be required to dress differently from how your sales staff dress. In any event, no one would be surprised to see a dress code in an employee handbook.

Describing a dress code does not necessarily have to include a catalog of articles of clothing. You can explain it in terms of professional expectations or presenting a certain type of image. Their overall presentation of themselves could be laid out in abstract terms, if it helps. Beyond clothing, proper grooming could be included as a dress code mandate.

If you are too controlling at one extreme, you will get a lot of backlash and people testing the regulations. Don't turn your small business into a bureaucracy. The other extreme is to not have one at all, or leaving it to the best judgement or your staff. You may then be risking some degree of inappropriateness in the work environment.

Set limits, but not too tight. People want limits; they respond and respect them. Remember to keep it in balance. Focus on the benefits of a light dress code. Should there be a casual Friday? Probably not, because then the limits are shut off and you may be facing inappropriate dress. Instead, consider adjusting to fit a consistent dress code that can be used every day of the week.

Dress codes are necessary, but keep them loosely defined. Be consistent and encourage professionalism for your business. Internal efforts make their ways in front of the customers. They help sustain respect for one-another.

While most policies work best with your existing staff, some policies are put in place simply to promote consistency and adhere to any federal and state mandates.

### Do I Have to Provide a Severance Package?

No law explicitly requires a company to provide severance pay. The Fair Labor Standards Act (FLSA) only requires you to pay a terminated employee through their completion date and for any unused vacation time that the employee has accrued. However, a company may want to provide a severance package. There are some benefits to offering it as part of the employee agreement. In some cases, it may even be required. Generally, small businesses will not be required to offer it.

Severance pay is the final payout for the layoff of an employee. The amount is usually correlated with the employee's tenure with the company, the level within the company, and the company size. If your company does offer severance, the amount can be set as policy in the employee handbook. Of course, severance may be listed as an employment contract item, in which case, it is negotiable upfront. Consider that severance pay need not be monetary. It may be in the form of health benefits extending beyond the employment term or may also include other benefits, like life insurance and career coaching. Many companies even work with outplacement consultants to help ex-employees find their next roles. All of these can be considered severance packages[13].

If you fired an employee for misconduct, however, it is unlikely that your company would have to pay a severance package. Nevertheless, it is always recommended to document issues leading up to the misconduct release. These issues are often challenged, so it is best to be prepared. The allegation may be that the termination was a layoff and not performance-based, in which case severance may have been expected. You may find your company liable for a payout if a case can be made that you had made implied promises about promotions, lifetime employment, or the company "taking care of the employees." Be careful, these might be written anywhere, such as in the employee handbook, email, or company memos. You may find yourself in breach of these implied promises and you may have to defend why this employee should not be paid a severance. An oral promise will have similar consequences. Even a history of paying a severance to ex-employees in similar roles may entitle a payout this time too[14].

For performance-based terminations, the best way to avoid lawsuits is to thoroughly document the conditions leading to the termination. Also, be sure to give adequate warning, in writing, such as a performance improvement plan, prior to walking them out. Not only should you want to give your employee the chance to improve, but it provides you with the legal defense from a wrongful termination case that may lead to a severance payout. Also, keep in mind that in the event there is a large number of layoffs from your company, a severance pay may be required by law, depending on the state.

If your company does offer severance, you should require that the employees sign a release that frees you from all potential lawsuits in the future. While considering severance pays for your company, think about if and how the severance package will affect any claims to unemployment insurance. Also consider how the payments will impact your tax liability.

"Since many times employment is terminated through circumstances external to their performance, the provision of severance pay is a positive and supportive gesture. The payment of severance pay is also viewed positively by the employees who remain who judge their employer by his or her actions. Keep in mind that they are watching carefully."[15]

Although it is not required by law to pay a severance package for laying off employees, it is probably a good idea to consider it for two important reasons: protection from a potential legal liability, and because it impacts the behavior of the surviving employees. Not to mention, it is the right thing to do. Remember, you can define what is offered, both monetarily and with non-monetary alternates.

### Don't Burn Your Bridges When Parting Ways With an Employee

There will come a time when you will part ways with your employees for various reasons. Some may be due to performance issues, restructuring departments, or downsizing. But some may be more amicable. Perhaps your employee is moving his or her family to another state. Maybe your employee has health issues or is retiring, or simply found a new job. In any situation, you should attempt to make the parting as uneventful as possible. Always try to keep the door open because you never know what the future will bring. The world is smaller than might think.

Some people may even return to work for the company they left years earlier. Some may get hired into different roles, such as a consultant. This may make sense if phasing out a role. The employee may find a new job somewhere else and transform into high-level consultant for you working nights and weekends. It could save the company a lot of money and provide your former employee extra income as a second job working from home.

## 1-4 Employees Are People Too

You can think of your workforce as a resource, but treat your people well. Like any resource, you need to feed it to see it grow. Show respect and honor them. They are the lifeblood of your company.

### Who is More Important: Your Employees or Your Customers?

Small business owners tend to focus on customer retention and pay little attention to the importance of their employees. That is because one is revenue-generating and the other is a cost. But without employees, you would not be able to deliver your products or services. So, perhaps you need to reconsider who is more important for your small business.

Since it is your employees providing for your customers, you could think of this relationship in terms of cause and effect. The employees are the cause of you having a successful business. They produce, provide, sell, and deliver to your customers. Employees are the lifeblood of your company and, therefore, most important relationships you will have. Customers are the effect, or result, of all the hard work of your employees. You cannot have customers without your employees. So, instead of thinking of your employees as a business cost, you should be thinking of them in terms of an investment.

They say that everyone contributes to generating revenues. Sure, some employees are part of a profit center, such as sales or marketing, while others are in a cost center, such as production and administrative roles. However, salespeople can only carry your customers so far, then they need to hand them off. All of your employees serve a necessary purpose for you to maintain a successful business. Therefore, they all contribute to the business' revenues. Even your finance officers and accountants locked away in the back office contribute. Without the numbers you rely on so heavily, you would not have the guidance to know where to best look for revenues or control costs. In other words, without business metrics, you would not know if you are being successful or not. Like or not, all of your employees are vital to your success, so make sure you consider their perspectives on things.

What is really worse, a pissed off customer or a pissed off employee? The employee calls for discontinuing service to this customer and the customer demands that the employee be disciplined. If an employee was at odds with a customer, whatever the reason, you will need to make a decision. You probably have no choice but to hear the customer out. But before making promises, perhaps you should spend the time to hear your employee's side of the story as well. Of course, the best solution would be one where you could keep the customer and keep the employee happy. However, if it is mutually exclusive, you must choose the employee and let this customer go dissatisfied.

Let's consider the consequences. You likely have lots of customers with few employees. A lost customer may shake things up a little, but generally might not impact the business negatively for long. Customers generally do not communicate with each other. However, a disgruntled employee could make for more of these customer dispute situations in the future. Whether you keep this employee or not, you will experience ripples of influence affecting all of your other employees because employees do communicate with each other. You will more likely have prolonged negative repercussions by siding with the customer.

The customer is not always right; instead, if you side with employees, you will always win. Happy employees deliver strong customer service. Turn your focus onto your employees; it is up to you to strengthen that relationship. This should be done through understanding and accolades. The buy-in you need takes time and effort. Start with acknowledging their sacrifice of time they spend in your office, often more time contributed here than with their families, friends, hobbies, and personal ambitions. They need to feel that you genuinely appreciate them and that you understand what it is like to be in their shoes. People want to be part of a team and they want to know you have their back. "As the leader, you need to set the tone that employees are not mere hired hands but people with needs, desires and dreams. You need to understand what inspires them and how you can make them feel personally appreciated for their service and connected to the overall mission."[16]

There are a number of things you can do to boost employee engagement. The most important is listening and responding to your employees. Get involved. Next, you need to set the example for everyone. As a leader, you need to "walk the talk." If you are not behind your own idea, you cannot expect others to follow. Consider your role as a coach. Push the idea by getting excited, motivate your employees to embrace their important role in the company, and run with it. Be present and supportive to everyone. Third, you need to be in the position to facilitate your employees, which means you need to be ready to provide the tools they need to succeed. You also need to follow up with reminders and examples. Finally, find ways to communicate how this impacts the employees individually. Words are cheap, but they can go a long way if they are genuine and thoughtful. This will help promote your message and step toward buy-in.

Employees are more important than customers. If you spend your efforts on your relationships with your employees, you will, in effect, have better chances of success with your customers. Show your appreciation for your employees, reward them, preserve the relationships, and invite them as a team member to do their part to help build something great. Doing that takes work, but like a strong investment, it will pay dividends.

You could also show appreciation by offering training to develop skills. This, in turn, will make them better employees and better equipped to succeed. Remember, their success is the company's success.

### What is More Important: Soft Skills vs Hard Skills?

You have two applicants, one has strong soft skills and the other has strong hard skills. The one you decide is starting next Monday may depend on what you are looking for and the role requirements. One applicant is naturally charismatic and the other is technically skilled. Both skill sets are important to your company's success, so what is the perfect mixture? What positions best fit their skill sets?

Hard skills can be taught, but soft skills come naturally. Of course that statement is a generality because we are not robots that can be programmed to complete hard skills. Some people retain and build off of hard skills better than others. Those that are more introverted tend to display more hard skills. These are the people that appreciate the time and space to focus and hammer out some surprising results. The positions that favor these attributes are back-of-house roles, such as accounting & finance, engineers, administrative roles, and hourly production staff. The hard skills technical background can be taught, but how the information is interpreted and developed is also important, so you will want to find an intelligent, talented candidate just as well.

Soft skills involve how well someone relates to people. Typically, extroverted people have strong soft skills. They thrive in certain front-of-house roles, such as sales, marketing, and on-site support. You will want witty, fast-talking people that are in constant contact with your customers. They are the representing agents of your company, so it is important you find the best candidate for the job.

So, which is more important? Well, the ideal candidate is the one that has characteristics of both skill sets. If a salesperson knowledgeable in the products and services, they can better handle customer questions and close more sales. An accountant who can get in front of everyone and explain the state of the business in terms everyone understands compounds his or her value. Engineers or even your production staff would have a better chance at solving problems in development or process delays. They are the ones that can think outside the box and take pride in their contributions. And, they are the ones that generally have greater job satisfaction.

Among your typical interview sessions, you should categorize your candidates in this way to how best they would fit the role and the company culture. Using this filter will help with placement and allow you to compare easier to your existing employees. Hire the right person, not just the right qualifications. This means you should consider the potential of the candidate in soft skills, but also in their ability to handle hard skills. So what if they are missing experience using your ERP or production software; these are the simple hard skills that can be taught. Identify if this person can handle it.

Startups want to be extra careful when choosing their first employees. Not only will you need to identify the right person demonstrating both soft and hard skills, startups should hire people with an entrepreneurial spirit. You company culture is not defined yet, so you need people to share a common wavelength -- eagerness to create something great from scratch, someone loyal to the team, and someone more likely to become department managers down the road.

Soft skills relate to interactions with other people and mostly tend to come naturally, while hard skills can generally be taught. One is not necessarily better than the other, but it is important to identify these characteristics when considering a candidate for an open position. Consider the right person for the job based on their mastery of these skill sets and not a narrow view of their past experience matching exactly to your company's systems, products, and services. Which skill set is better depends on the position you are looking to fill, unless you are lucky enough to find someone that represents both strong soft and hard skill sets. Hang on those people as they may not just carry your company, but propel it to the next level.

There are times when you might hire someone with strong hard skills, but instead of just lacking soft skills, they end up being toxic to your workforce pH balance. You know who these people are; they get stuff done and do it well, but it is about how they go about these achievements that is questionable. They lack respect toward other coworkers and appear to be two-face when talking to the boss because all they see are aspirations of career growth no matter the cost or who gets hurt. Unfortunately, these types of people cannot easily be screened out during the interview process. However, if you hire someone that is a major disruption to your workforce, you should consider parting ways sooner than later.

### Your Employee Might Be a Narcissist in the Office If...

Narcissism is a personality disorder that puts some people at a disadvantage where they lack moral conscience, a level similar to a six-year-old. They are envious and competitive, extremely sensitive to personal criticism, and extremely critical of others. They do tend to be passive and often naive despite their inflexible authoritative approach.

Narcissism, in lay terms, basically means that a person is totally absorbed in self. The extreme narcissist is the center of his own universe. To an extreme narcissist, people are things to be used. It usually starts with a significant emotional wound or a series of them culminating in a major trauma of separation/attachment. No matter how socially skilled an extreme narcissist is, he has a major attachment dysfunction. The extreme narcissist is frozen in childhood. He became emotionally stuck at the time of his major trauma of separation/attachment.[17]

Narcissism cannot be reformed without professional help. Any behavioral change must come within and, unfortunately, they would not see themselves as someone who needs to be changed. If you fear you may be a narcissist in your workplace, take a moment to dig deep within and reflect on the following attributes.

Your employee might be a narcissist in the office if...

She is the only one pulling your own weight around here

She has to ride people to get anything done right

She has to cut people off from their nonsense

She works with a bunch of buffoons

She has to explain to the customer that other departments dropped the ball

She cannot understand how your boss can accept such mediocrity

She can run this place better than the owner

She knows more about your department than your department manager

She doesn't waste time sending email only to thank someone

She should be the boss of all these people

She doesn't understand how her leadership skills go unnoticed

Nothing goes as smoothly as she envisions it

It is hard to understand how people over-complicate everything

If all the pictures on her desk include herself

She has to bully people just to get them moving

She doesn't understand why no one wants to go to lunch

She enjoys talking bad about others in the office

She feels entitled to all the perks

She cannot ever succeed because of others' incompetence

She likes her coworkers, but she hates those guys

She gets along with her boss, but really, that person has got to go

She thinks her boss is in her way

People are not too busy; they just refuse to help her at the drop of a hat

During a budget meeting, she openly discusses her kid's spending habits

She wants to be heard, so she attempts to take over meetings

Doesn't understand why people are hurt when she tells them how badly they are doing

Others are overly sensitive to her detailed criticisms

Sarcasm just passes over her head

She has a mirror on your desk at all times

She doesn't know what that means when people say to her that something is ironic

She wants to associate with her boss's boss

She only smiles when she is talking to her boss

She can't imagine herself buying donuts for others

She cannot define empathy to someone

She is only charming to those who have what she wants

She can't stand not knowing what is going on in those closed door meetings

She needs people to worship her

She demands that her minions obey so she can succeed

She can't handle a taste of her own criticism medicine; what is irony, anyway?

She doesn't really get many of the jokes told at the office

Although this is a social disorder, it is not a disability. Documentation on misconduct and insubordination should come easily as many coworkers would testify to these claims. It may not necessarily be a performance issue, but it is very much an issue of being a fit with the company culture and workforce. You need to be careful with your justification for termination.

## 1-5 Terminations

When it is time to part ways with an employee, there are some things to consider. Firing someone is not as easy as you might think. There is an emotional toll involved, especially if you feel invested with your employees. There is also some final paperwork to take care of. God forbid, if the separation is unexpected from someone you want to keep, you will need to step up and take care of business.

### 5 Reasons It Is Hard for You to Fire Someone

1) **Emotional:** it is emotional to let someone go, especially if the employees believe they are doing well, but continue to fall short. It will be an emotional and uncomfortable conversation. It will be emotional for you, too. You may simply fear delivering such bad news to someone you know pretty well. This anxiety just builds up and eats away at you. Then, when you deliver the blow, you have a number of emotions racing, from doubt to empathy to sorrow to assuredness, back to doubt again, etc.

2) **Deep impact:** you realize that you will be changing their lives. As an extension, you come to realize you are impacting the way of life of innocent spouses and children. You feel this power you have actually begins to conflict with your decision.

3) **Nurturing:** you feel like you have a duty to take care of and protect your employees. The last thing you want to do is run them over. You have come to know these people well and you find this kind of dependent relationship that has established. How can you kick someone out of your family?

4) **Uncertainty:** you feel you might regret losing this person in the future. From a resource management perspective, you begin to doubt this decision. You know you are creating a situation where part of your knowledge base will be walking right out the door.

5) **Fear:** you are afraid you will not get a replacement up to speed quickly enough. As a manager, there is always a fear that the new replacement will not be ready or not perform as well as the one that was fired.

Sometimes, you have to take a step back to move two steps forward. You are justified in your decision to let this person go. Don't let these emotional attachments stand in your way. As a business leader, you have to overcome these challenges to do what is best for your company. From a business perspective, they cannot be allowed to remain, so you really have no choice but to follow through. Just remember that if your employee continues to fail, they have not found their rightful place yet. Help them find where they will be more satisfied with their career somewhere else. Feel good that this decision will be a blessing in disguise for them and a win-win all around.

Whether or not a change to your human resources is a good thing, there are certain steps you should take before your departing employee's last day.

### More Paperwork[18]

The paperwork involved for termination is not quite as extensive as when an employee begins working for your company, but there are few important things to consider when an employee leaves your company. Communication is key and having the departing employee sign some final documents will help maintain your support coverage from a legal standpoint. You may even want to draft an Exiting Employee Checklist that gets signed by both parties.

#### Final paycheck

Calculate and explain the gross amount of the final paycheck during the exit interview. This eliminates any surprises and gets acknowledgement from the employee. Depending on when the final day of employee falls during the payroll cycle, the final paycheck will likely be prorated. Be sure to include any unused vacation time that has been accrued as well as any earned, but not yet paid bonuses and commissions. You should get your departing employee to sign an acknowledgement form that they understand and agree to the final payout.

#### Benefits and COBRA

Terminations bring about additional forms from the insurance providers. You will likely need to forward copies of them to the departing employees. If an exiting employee chooses to continue to with his or her insurance after a qualifying event, you must offer them COBRA insurance, provided, of course, that your company has 20 or more employees. It is also provided that your company offered health benefits to begin with and this employee enrolled in that coverage. Further, it does not matter why the employee separated from the company. The good news is that the employer is not required to pay any part of the COBRA coverage. The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) requires most employers with group health plans to offer employees the opportunity to temporarily continue their group health care coverage under their employer's plan if their coverage otherwise would cease due to termination, layoff, or other change in employment status[19]. However, this requirement is only for medical coverage. If separate benefits for life or disability were provided, they would not be eligible for continuing coverage. For more information about COBRA, visit the Department of Labor website at: https://www.dol.gov/general/topic/health-plans/cobra.

#### Returned equipment and sign-off

Make sure you prepare a checklist of items to collect on the employee's last day. There are usually more items than you think. Plus, you will be required to give notification of a couple things as well:

\- Health Insurance Portability and Accountability Act (HIPAA) certificate provided by your insurance provider to position the former employee into a special enroll status, like a qualifying event, so he or she can get onto another plan immediately.

\- Notice of a continuation benefits plan (COBRA)

\- A copy of the confidentiality and/or noncompete agreements to serve as an important reminder

It is in the best interest of the company to complete an exit interview checklist and keep signed acknowledgments to avoid any future disputes.

### Responding to State Unemployment Claims

Do I have to give the state unemployment agency the reasons for termination? When your former employee applies for unemployment benefits, you will likely be notified of the claim and the employee's version of the reasons for termination. It is in your best interest to respond. You may only need to state whether the termination or resignation was voluntary or involuntary, but it is better to provide a more complete statement of reasons and related facts. Be sure to dispute the claim if the employee lists a distorted reason. Former employees with behaviors of misconduct should be ineligible from earning unemployment benefits, so watch for unfounded claims. It is always recommended to get legal advice before responding. Unemployment claims that get processed by the state will impact your unemployment tax rate in future years.

### Should You Make a Counter Offer?

Sometimes the employee that is leaving is someone you would prefer remain. If one of your top performers gives notice, you know your company will be directly impacted. Even if you could find and hire someone competent to replace your departing employee, there will be a huge learning curve to overcome before that person becomes a top performer. Consider that it is likely the new employee will never reach the level of one quitting. The alternative is to consider swaying this existing employee to reconsider. This may involve making a counteroffer.[20]

To keep employees with hard-to-find skills or a lot of experience and knowledge of the company, it may make sense to make a counteroffer. It may be a win-win with the company and the employee, but it may instead convey a message of favoritism, which may not sit well with the rest of the employees.

Furthermore, you might have to question the loyalty of the employee. In the back of your mind, you will always be wondering if they will continue to seek employment elsewhere. Additionally, you may risk the employee's performance deteriorating somewhat. It may be harder to inspire teamwork and motivation with this employee. In the end, a counter offer may be nothing more than a short-term cure for a long-term problem.

However, if one of your top performers are moving on, there are steps you can take to help transfer that vast knowledge base before they leave.

### Don't Just Watch Your Top Talent Walk Out the Door

" _After a number of years climbing the ladder, Susan will be leaving us. She has been a tremendous asset by contributing to the development of our biggest product line and cultivating many great performers on her team. She will be missed. To honor Susan's tenure at the company, we will be having a company event after hours on Friday to wish her farewell."_

Nothing is scarier to a business owner than to lose a top-performing employee who has grown with your company and knows the most about your products and services. Part of your greatest resource, your human resources, has just become a bad investment. Assuming you have done everything you could to prevent you top talent from leaving, there are some measures you could take to minimize the gap from this transition.

You need to find a way to transfer as much of that experience and expertise from your departing employee. Act now, the countdown has already started. Sit down with your employee and set up a schedule of events that would hopefully maximize the transfer of knowledge right up to the last hour of their last day with your company. You will still have a gap after they have gone, but you need to get to work to reduce this gap as much as possible. Just keep reminding yourself that no one is irreplaceable and your company will overcome this departure. So how do you go about keeping this information from simply walking out the door?

Think of ways you could capture that knowledge base from your departing employee. Conduct, not just one, but a series of exit interviews. These could resemble various training methods:

\- Consider having multiple people sit with your employee before it is too late. This could be one-on-one or in small groups.

\- Make sure everyone understands the topic of focus and make sure they are ready to deep dive for answers. You could also ask your top talent to prepare some writing assignments of best practices.

\- If your departing employee could put together a portfolio of actions to take, when to take them, and why they are effective, this could substantially help your remaining team.

\- In addition, ask her to conduct some casual Q&A sessions with a group. Set the topics and keep everyone on task, but allow the variety of questions and answers flowing. Make it a company lunch event if needed.

The importance of wringing every drop of knowledge will uphold your other employees' performances and the bottom line of your company moving forward. If you can formalize these types of sessions, depending on your industry, have her train others.

\- More than Q&A sessions, these extended training assemblies would cover a lot of material in front of perhaps an entire department or your whole company.

\- You can mix it up by having your departing talent conduct presentations, lectures, and perhaps even a live exit interview in front of everyone.

\- If your industry demands off-site work, such as sales or field services, consider having other employees shadow him or her. There is a lot to learn by working as an apprentice. This type of mentoring in general, even with a rotation of employees, would be a benefit even after your top talent walks out the door.

\- The point is to hoard what you can in the time you have left with one of your top employees.

Turnover happens, so there are lessons to be learned here before scrambling to save what you can in a two-week time frame. To be proactive, consider establishing regular in-house training sessions on a regular basis.

\- Cross-training your staff will have numerous benefits, such as a potentially better matching of workloads with the passions of the individuals, better sharing of ideas and process improvements, and always having a backup. See Chapter 3-8 for more information on cross-training.

\- Taking it a step further, think about constituting a mentoring program. Such a program would empower your top talent to, not only teach newer employees about intricacies about the position, but share in the secrets of their success. Similarly, you could implement a program to shadow other employees. This is a great way to show your up-and-comers the ropes. They would be able to witness first-hand what it takes to be successful. These programs could be started even in a very small business.

\- Lastly, depending on the size of your company, you could formalize a type of cross-training further through internal auditing. You would have a random selection of people to complete a procedural audit of processes in an entirely different department. Although this option is perhaps the most time consuming, it is effective at opening the minds of your entire staff with a better understanding of how everything in your business flows.

All of this takes work on your part. No matter how active or passive you have been with regard to the operations of your business, now is the time to step up. No one else will have the vested interest as you, so it falls to you to schedule the itineraries, the meetings, and the topics to cover. During the sessions, your presence may also be required so that you can facilitate these events to keep the focus. Make it meaningful and worthwhile. All of your effort will be worth it because it will find its way onto your P&L.

One of your top performers is leaving with a knowledge base of information about your business and best practices, so take action now to share that expertise with the rest of your employees. There are so many methods of training that can involve just about everyone in your company, as long as it is planned well. It is up to you to set up a series of training sessions in multiple formats and facilitate those events. It is the only way to maximize this knowledge transfer before time runs out.

How can you keep up with all of this compliance, paperwork for new hires, engagement, performance development, training, more paperwork for terminations, etc.? Human Resources already has a large volume of requirements. We are just getting started because, beyond compliance, there is so much more you can do with this resource to achieve a new level of growth and success. If you do not yet use an online HR tool, now is the time to consider subscribing to one. The larger your organization, the more you will need to rely on an HR management tool.

## 1-6 HR Management Tool

Until recently, only large corporations have had all the tools and knowhow of operating a functional HR department that helps keep the human elements in order. It is time for small businesses to get a flavor of that knowledge and experience and convert it to a smaller scale that is more suitable for their operations.

Much of the paperwork and processes can be greatly simplified by using an HR management tool. Cloud-based applications, such as littleHR.com, make it easier for small businesses to now have access to these management systems, all for an affordable price.

So what, your small business has been able to manage changes with HR before, hasn't it? Do you really need one? The answer depends on your ambition to grow your business. You can probably continue to get by as you always have, but the conveniences alone are worth the low monthly payments. However, if you want to implement some of the more advanced HR concepts, in the coming sections, to increase your bottom line and grow your company, you should seriously consider looking into one. The chances are probably in your favor since you are interested enough to read through this book. And I say "in your favor" because you are the one that benefits as a return on investment for work you put in.

Let's first introduce online HR tools with some examples of immediate benefits. Then, we can examine why managing your human resources is so important for small businesses to begin with. Finally, we can begin discussing how these online HR tools let you go beyond compliance and really take control of your most expensive resource.

### Benefits of Using an HR Tool

Sign up with littleHR.com, or another HR management tool, to get results today. They bring a tremendous value to your small business simply by sharing a common platform for all of your employees. Begin by offering a community where everyone has a voice and information is shared. Then you will see some new techniques emerge quickly.

#### Lose the spreadsheets

Spreadsheets are wonderful tools for various analyses and metrics, however, they have some big limitations when it comes to collaboration and communication with employees. Small businesses need to learn to use HR-related knowledge and tools to advance their staff toward a new level of success. All too often, the tools do not exist or are poorly utilized. How many spreadsheets does your company use to track information regarding your employees? Here are some of the problems you may face by relying on spreadsheets for your HR needs:

\- Spreadsheets have traditionally been difficult to share with everyone in the company. They tend to be accessible only by the creator and not seen by others. Even using shared drives, files get saved in various folders and difficult to find. Collaboration is still not quite as unified as it would be through logging into an HR tool.

\- Spreadsheets are not updated in real time; they are a snapshot in time. Any document that is published immediately has already started to age. HR tools are always up to date with the latest changes.

\- Spreadsheets are usually made with a certain focus in mind and they tend to be missing other useful information. You don't know what you don't know. HR tools are designed to include all the information you will need so you do not have to recreate the wheel.

#### Policies and notifications

Communication is the underlying achievement leading to all of the benefits of using an HR management tool. This common platform informs when actionable events are due, keeps track of employee information, and encourages employees to send and save notes.

If you distribute hard copies of company-wide memos and policies, any updates and corrections will have to be made in amendments or with new copies altogether. If you require acknowledgement signatures, tracking these can be a project by itself. In small businesses, news is usually communicated verbally, but then there are always those that do not "get the memo."

An HR tool can help by posting company-wide memos on the main page. Tracking acknowledgments is also built in, so you can see the progress at a glance. Direct messaging is also available to show a notification the next time the employee logs in. Things like policies and memos can be communicated with ease. Additionally, this feature enables small businesses to develop and communicate their company culture, a baseline for all employees to follow.

#### Time-off management

A sales rep from a national brand payroll company was trying to sell their HR management system to a small business. The HRM did everything, more than a small business could ever use. The owner just wanted to track simple things such as time-off management. This monster tool was great for this, but many of the other features went unused because they simply did not apply to the business at such a small scale. Additionally, the cost for this service was a massive expense on a small budget; "only" 1 FTE (the gross annual salary of one full-time employee).

Most companies would turn down such an impractical tool. They would much rather resort to tracking time off on a spreadsheet. Here lies the difficulty of tracking requests and which ones were actually taken and rejected. Sure, the spreadsheet was good at calculating eligible time-off accruals on, but fails when it came to collaborating with others. Even with all of this information tracked, only my manager had visibility. Employees had to constantly ask or personally track how many days they had left so they could plan accordingly. The mechanism falls apart because constant real-time updates are not user friendly in a spreadsheet.

HR tools today, such as littleHR.com, are made with small businesses in mind, both in budget and in usefulness. Requests can be made online. Managers are pinged via email to approve. Before they blindly approve time off, they can view the request against other time off planned by that employee, and in conjunction with other employees' time off. Employees are notified as soon as their requests are approved or rejected. Everything is automatically updated in real time.

#### Objective settings

A small business owner was forward-thinking enough by intending to introduce some level of performance tracking for his office. However, he was unsure how to go about it. He found hard copies of predefined competencies that, unfortunately, did not apply directly to positions. These were very general and each competency had a space for employees to handwrite their comments accomplishments. Where did they get these from? Were they copied out of some book? He was on the right track, but simply needed the guidance to carry it out successfully.

In a satellite office of a different company, the HR rep there provided their employees with a Word template that had an objectives section. These were blank fields for them to fill out, without any guidance. They were asked to write SMART objectives without ever really explaining what these were. How could they expect their employees to write any meaningful objectives? It turned out, they were never really examined by their managers anyway. The entire process was simply a box to check. So, that begs the question the company's importance of these and their value of their employees. More discussion around objective settings is coming up in Chapter 2-2.

Small business HR tools, like littleHR.com, were created because of the growing importance of thoughtfully managing your employees. HR is the most expensive resource for most small businesses, but it is often overlooked because it is not well understood and challenging to get started. Before getting into the implementation of HR concepts, let's review why HR is so important for small businesses to begin with.

### HR is Even More Important for Small Businesses

The need for small businesses to align goals and motivate their staff is even more important -- it is often a matter of survival. Human resources is more than hiring and firing. Large organizations know this and take steps to structure their human resources to best fit the needs of the company. Addressing the professional needs of your employees is absolutely necessary to see real organic growth in your small business.

The value of human capital can directly impact your bottom line. Especially for small businesses, where employees typically cover multiple roles. If one person leaves or does not pull their own weight, it severely impacts operations and profitability. Employee satisfaction is more important than you might think because it comes back around full circle. If you watch these measurements seriously, you can quickly make meaningful changes to your business.

Let's say you had to terminate an employee. That gaping hole is probably going to impact the financials much more than it would for a large enterprise. Moreover, this termination will have a greater impact on all of your surviving employees; the burden for everyone else is greater. Worse yet, it is also possible that no one else can even pick up the slack due to overwork, scheduling conflicts, or lack of expertise.

Likewise, poor performance from one individual has a greater impact on the entire company. It is like pulling an anchor with some people. The smaller the business, the bigger the anchor. Not only will their poor work ethic infect others like a virus, but these others will have to pick up the slack, which is proportionately harder on those in a small business.

Small businesses usually do not have an HR department available to turn to for guidance. This may fall to the business owner or the Controller to solve. Unfortunately, he or she may not have all of the resources available to know how to solve every problem that may come up. Dispute resolutions, including harassment, are among the least prepared issues small businesses may need to deal with.

Remember, your human resource is your most expensive resource, so it would be in your best interest to invest appropriately in this resource to keep everyone performing at their best. The key is to make sure their features are aligned with your company's needs.

### HR Tool to Take You Beyond Compliance Issues

With a renewed appreciation for HR and the impact this resource can have on your business, let's turn now to what can be done to help you take control of this resource. Remember, an HR tool will enable you to take steps to improve your management of HR, but you will be doing the work. You will be the one introducing new concepts to your employees and turning your human resources into a mechanism for growth. You will be the one providing your employees with a stronger, more cohesive workforce and better employment recognition. HR tools enable you to provide your company with a stronger potential for growth.

You get out what you put into it; it comes around full circle. You scrutinize over financial metrics, production analyses, growth trends, etc. But, how do you measure your human resources? Now you can establish HR mechanisms for your small business; cloud-based HR sites like littleHR.com provide the tools and guidance you need to better your workforce.

The secret is by investing in your employees, you are investing in your company. This level of employee appreciation leads to job satisfaction, which in turn, will enrich your human resources to the betterment of your company. HR management tools can provide many useful features that, with a little guidance, will enable small business owners to turn their employees into more productive, fulfilled team members. Below are eight features you can achieve to reach a new level of success:

\- Setting Objectives is an important way to establish your company's core values, keep the workforce focus in continuous improvement, and align your employees' goals with your company's goals. Objectives set the foundation for performance measurement and improvement. This provides your employees with guidance and evaluates whether they are best suited for the jobs relative to their skills and expertise. See Chapter 2-2.

\- Core Values are more likely to be promoted through an HR tool. These core values are business principles that are pivotal to your vision and assembles a cohesive team. Adhere to strong principles and others will follow.

\- Performance Measures open the door to establishing a career path for your employees in your company. Building career paths allows your top performers to transition into leadership roles with the company. This not only provides your company the best chance of expansion and success, but growth with stability. See Chapter 3-7.

\- Evaluations get your managers involved by holding more discussions with their employees and conducting quick periodic surveys that rate your employees' performances throughout the year. See Chapter 2-4.

\- Compensation Management promotes pay-for-performance. Make your employees earn it. See Chapter 2-5.

\- Organizational chart provides a hierarchical representation illustrating each employee's place in the company, which actually affects behavior and motivation.

\- To-do reminders are living, breathing lists that hold your action items together for you.

\- Email notifications are reminders of actions and/or important deadlines that need your attention.

Management tools like this can help you better organize your workforce, which is essential for growing your company. These concepts and more will be reviewed in detail in the next section. These are best practices in HR that go beyond compliance issues. They explain how you can bring structure to your HR and how taking control over your human resources will impact your bottom line. Later, we will take these concepts way beyond by talking further about how you can maximize your human resources to get the greatest potential for growth.

# Section 2 - Bring Structure To Your HR

Learn how to bring structure to your human resources so you can align the efforts of your workforce with the company goals. The traditional mindset of throwing warm bodies at general areas, putting out fires, and living in the short-term of your business has been going on for long enough; now is the time to improve the process. This is generally done by determining the best fit for each position using performance measures. Take control and bring structure to your human resources.

You will find that introducing an HR structure will result in increased revenues and a reduction in expensive revolving door costs, which are both direct and indirect. Direct costs hit your P&L when advertising for an open position, additional training costs, and costs of new office equipment. Indirect costs are things like learning curves and the investment in time before you can expect any real performance. Also consider that those who walk out the door are usually top performers with a solid knowledge base about your business. If you have a lot of turnover in your business, the performance across your staff on average is probably mediocre at best.

Break out of the status quo and turn your small business into something better. Your human resource is your largest resource, so taking control of this resource is paramount. This section teaches how you can implement and use performance-related concepts in your business that will impact your bottom line.

## 2-1 Pay-for-Performance

Make your employees earn their pay. Since compensation is a powerful motivator for changing behaviors, let's begin our discussions with pay-for-performance. This is where you set expectations, share those expectations with the employees, and measure their performance against those expectations. The idea is simple: structure compensations around how well your employees perform. The more they put into your company, the greater the amount they see as a return.

### Why Is Pay-for-Performance So Important?

Bob and Sue both received a Christmas bonus. That's great, except Sue worked hard this year and has truly earned her bonus. Bob just skates by and still gets a bonus, just like most other people in the office. In fact, this bonus has become an expectation, like part of the annual salary. No matter what their level of performance is, they can still count on getting a holiday bonus.

Stop paying everyone flat holiday bonuses and start paying based upon their performance, efforts, and accolades they put into the company. Is it fair that both Bob and Sue received the same bonus?

On a pay-for-performance plan, these two would not receive equal bonuses. Awarding bonuses based on performance allows you to pay accordingly, and ultimately promote your top achievers and release those underperforming. This change would allow you to better manage your human resource, which is often the most cost-intensive and most important resource. It is up to you to put in the investment of time and effort to better manage the staff. But only a little extra effort is needed.

Consider a pay-for-performance annual or quarterly bonus. If the timing is at year-end, disassociate it with the holiday season as much as possible. It is important employees do not view the bonus as if they were already entitled. Quarterly bonuses immediate help to dispel the association with the holiday season and ties the payouts to overall company financial performance. HR management starts with performance evaluations and awarding accordingly. This process has been proven to identify your star players, root out your underperformers, generate better employee satisfaction, and increase your bottom line.

All of these benefits can be achieved by instituting steps toward a pay-for-performance model. Make your employees earn it. This is the first step toward taking control of your human resources. They are a resource for your company. You need to begin strategically thinking about your employees as such.

### Treat Your People Well, But Evaluate Them Like a Resource

Your employees are resources for your business. Sure, they are people, so treat them with dignity and respect, but evaluate them like a resource. You are not herding cattle, but you should be directing their focus so you can grow your small business. People will usually only do what is required and tend to take the path of least resistance. Follow these 8 steps to get the employee base you need to succeed:

1) **Visualize:** strategize and visualize where you would like to company to be and the type of employees you wish you could employ.

2) **Current employees:** take stock on which employees you have to work with today. Think of their skill sets as game pieces to be placed in the optimal positions. Be strategic.

3) **Stay objective:** evaluate their skills and recent performance without bias. Although most evaluations are heavily subjective, it should not matter if you personally like one employee over another. See Chapter 2-3 on evaluations.

4) **Documentation:** write up your underperforming employees where they are falling short. If they cannot improve their performance in a matter of weeks, you have a duty to release them. And you would be doing them a favor because otherwise you would be subjecting them to conducting subpar work when their true calling is likely somewhere else. Let them go find their passion. Be strong and do what needs to be done for your business. See Chapter 2-6 to get more information on releasing underperformers.

5) **Hire right:** take your time to hire the right skillset. Interviewing is not really enjoyable for anybody and employers are sometimes too quick to choose the pick of a small litter, which puts them back at square one. If you do not find the right person, take your time and keep looking.

6) **Personality matters:** hire the one that has the best mix of characteristics and skills, not necessarily the most qualified. Chapter 3-7 has a section on hiring the right person.

7) **Reward accordingly:** make sure you are showing praise for your top talent. You want them to stay because you value their contributions. Chapter 3-2 talks about recognition.

8) **Make them earn it:** move to a pay-for-performance method of compensation. littleHR.com can help you accomplish this for you.

All of these items will be discussed in further detail throughout the book. Your primary focus while we introduce these concepts is to try to remove favoritism and subjectivity from your assessment of what is best for the company. Your human resources is just that -- a resource you can control and organize in order to increase your bottom line.

## 2-2 Objectives

The cornerstone of pay-for-performance is objectives. It is the foundation, so efforts must be made here in order to achieve any return on investment. Don't just go through the motions. Dig deep to draw out meaningful objectives from your employees that will not only help their own careers, but lead toward the achievement of the company goals.

### How Can I Align Objectives with Company Goals?

Employees should set objectives that align with company goals to maximize the purpose behind those objectives and the whole pay-for-performance structure for your business. So, how do we do that? Well, let's start with the company goals. Well defined company goals should reflect your company culture as well as to set high-level performance goals for the whole company. Then, conduct a series of meetings with your department managers to train them on what these company goals should mean to them. Following that, in your next company-wide meeting, you should address the need for employees to set their individual objectives for themselves, but also in line with the company goals. Finally, when their objectives are submitted, managers should scrutinize them prior to approving them for the year.

What's that? You don't have any company goals set up yet for this year? Ok, you should be able to write two or three goals for the company this year. These are typically financial goals, but they could also relate to production, headcount, sales volume, etc. You can go back to your company's mission statement and look over your company's core competencies or code of conduct for some inspiration. These are what define your company culture and what your company stands for. Chapter 3-10 talks a lot about how to create a company culture.

If you don't have any core competencies defined for your business, it is not too late. Think about the nature of your business and what the necessities are to make it successful. Review that mission statement again. You should be able to draw a straight line from those to defining what your company means to you and how you want it portrayed to your customers.

Now that you have begun to think about your company culture, you may want to establish a code of conduct for everyone to follow as well as a few related core competencies that can be added to evaluations. These statements of commitment to each other and the customers can become a creed and every execution is checked against that creed. Make it known that everyone will be graded on these in the evaluations. Publish these statements. Put them on signs and hang them high throughout the office. This is the first step toward building employee loyalty and potentially improving job satisfaction. It is also the first step toward developing your company goals.

Building off of your core competencies and code of conduct, you are now ready to identify a few company goals for the year. At least one of them probably should be a financial goal, such as a percentage growth, pay off that line of credit, or hitting a specific number. Examples might be as follows:

\- Earn 10% greater Total Revenues over last year.

\- Cut costs by 5% over last year.

\- Increase headcount by 2 full-time employees in the Production Department.

\- Land ten new customer accounts by the end of the year.

\- Curb turnover and improve overall morale.

\- Improve customer satisfaction by following up more often with updates.

\- Change from a reactive model to a proactive one.

After you have completed your company goals, it is time to roll them out to everyone in the company. All of your employees play a part in making those goals happen. Simply broadcasting them puts a powerful onus on them and now everyone can think about how they can help get there. Once everyone is onboard, get your managers to complete their objectives first. They will get submitted to you for review. You should reject them if they do not align with your company goals or approve them as long as they meet your needs. Follow up as needed. Hold a discussion about this so that your managers are empowered to do the same for their employees. With certain confidence, this year should bring better results because now you have everyone marching to the same beat.

Setting objectives bring purpose to your employees' performance with their day-to-day positions, but also can be the vehicle to align their efforts toward achieving those company goals. Employees' objectives should require manager approval to ensure they are indeed aligned and to make sure the objectives are meaningful to the employees.

Objective settings are also an opportunity to encourage employee engagement. This is the chance managers and employees get to work together to establish the course of their performance. Get your managers to set up meetings with each of their direct reports to discuss what contributions they can bring to the company. Chapter 3-3 covers more details on employee engagement. The performance of your employees day-to-day determines how close they can come to achieving their objectives and the company goals overall.

### Why Bother Setting Objectives?

If we do not plan ahead, how would we expect to get anywhere? Actually, it is natural to determine what you desire and plan on how to go about getting it. In business, however, we get stuck in routines and end up lost in the weeds. That is why extra effort is needed to get your employees to set objectives. What is also a natural tendency is to follow the path of least resistance. For that reason, it is more likely to end up with a wish list when attempting to write objectives. The difference is holding oneself accountable to actually achieving the goal. A wish list would be nice to fulfill, but priorities are often not set against them. Objectives are more robust because they are statements of commitment with a deadline.

To make objectives even more valid, consider having employees share their objectives with their peers and managers. Solidify their commitments to the company but inviting their peers and managers to hold them accountable to what they say they will do. In a way, objectives help drive motivation. They build in a pathway to success, which makes it easier to spark an internal drive mechanism to reach for those goals.

It is easy to see the advantages from an employer perspective, but let's take a look at what's in it for the employees. Ringing in the new year, which means your employees will have to face a new set of objectives back at work. Why is it so important to set objectives anyway? Of course you require them for specific purpose, but your employees should demand them for themselves as well. Objective settings at work should be even more important to your employees and their careers than they are for your company. If they do not see it that way, it may be up to you to make them see the importance of objectives.

#### Objectives lead to purpose

Unless your employees are just punching the clock and then tuning out, you might expect that they are concerned with how they spend their time, a large portion of their lives, to earn that paycheck. In line with questioning one's existence, they may want to know that their efforts will bring about change for the greater good. They may even have the desire to leave a footprint, be remembered or admired, for being part of something great. Your employees should want to have a purpose for their work and overall existence. Time is valuable; they should make their time meaningful. Make it count! Objectives set the pathway for them to reach their career goals so that they can make their efforts and their time count for something. Not just for your company, but also for themselves.

Too often, people get lost in the day-to-day, so this would be an opportunity for you to encourage them to contemplate their positions, their time spent, and career development. Inspire your employees to aim at becoming top performers, by actually enjoying what they do for a living. The requirement here is that the objectives must be meaningful. They have to be achievable, but challenging. These should not be obstacles from which they might feel defeated, but should be the types of challenges that they look forward to overcoming. It seems like only few people in this world have been fortunate enough to overlap their work and their lives' passions. Explain that it may take time, but their efforts toward this year's objective settings will get them one step closer to reaching their passions. It would solidify their position and gain job security if your employees genuinely enjoy their work. Encouraging your employees to explore these insights would show that you care about your employees and they would take the first step toward aligning their objectives with your company goals.

#### Align with the company goals

The idea is to make sure your employees' objectives are aligned with the company goals so that the success of your employees becomes the company's success. Set it up so your employees succeed and the company is better off for strong performance. Instead of just going through the motions, it should quickly become evident that those who have an interest in fulfilling these objectives and, ultimately, play a key role in your company. Those who clearly lack the interest of creating meaningful objectives, and certainly do not align with the company goals, should be added to the short list and evaluated for separation.

#### Justification

What are objectives without them being evaluated? The true purpose of company-aligned objectives is to evaluate how well your employees performed and how close they got to achieving those objectives. Therefore, meaningful objectives will carry more value and should be weighted higher. Nevertheless, the focus is to achieve the set objectives since this is the benchmark used to measure success. Essentially, your employees' objectives provide managers with a means to justify their pay.

Now you have a measure assigned to each employee. The justification exists with these evaluations to determine whether you have the right people driving your business forward. This stage is an interesting time for your company's development of your HR functions because with evaluations, you can now make the tough decisions: you will have the justification to dismiss your underperformers. Make the business decision and bring in the talent that will drive your company further.

Managers need these objectives to measure individual productivity and success. These objectives are essentially graded at the end of the year to provide a measurement of employees' performance for the year. This will impact their compensation by driving the merit increase rate and any potential for a promotion.

#### Pay-for-performance

Since the objectives are used to measure an employee's success, it makes sense they are tied to their compensation to measure their worth in your company. These objectives are statements of commitment over which an employee is announcing and claiming responsibility. They must be held accountable to these. A pay-for-performance model determines their level of compensation. Therefore, these objectives should be the most important element for an employee's position and career in the company. They are needed to measure accolades and success.

Only with objectives can employees reach these qualities to bring value to their relationship between each one and the company. Worthy objectives your employees successfully achieve will provide them with a sense of purpose, justification for a raise or promotion, and pride in dominating their profession.

### Why Does It Take So Long To Write Objectives?

Writing objectives is a beatdown for some as employees are faced with writing these statements of commitment from scratch. Although objectives are important, employees are rarely trained on how best to write objectives. So, they are left writing something they think is sufficient. Their objectives end up being fragments of information that requires interpretation, which end up being measured subjectively in the end anyway. Yet, objectives can be made purposeful, quantitative, clear statements of what one aims to accomplish this year in a shorter amount of time in three simple steps:

1) **Make them meaningful:** the key is to understand that objectives are supposed to be meaningful to the role. That should get your employees thinking of what successes could be accomplished in their role. They must visualize what their role might look like in the future. Encourage them to paint a picture in their minds using broad strokes. What is it they want to accomplish in the long term? Tell them to take their time and really think about it. Right away people tend to reach for action words to define their position, but still end up guessing what the actual objective should be.

2) **Focus on the results:** each objective should be written based on the results of their actions, not merely the actions themselves. They must think in terms of success and what results have to be achieved to reach that success. This is a more detailed impression that has them writing down the only the result as a fragment, regardless if there is an action word or not. Once this is achieved, they will need to complete the objective with specific details of that achievement.

3) **Make them quantifiable:** add specific attributes that define a deadline and/or impact to a department or group. These attributes add quantitative elements that allow your objectives to be measured.

Now you have a format to writing SMART objectives you can present to your employees. SMART objectives are those that are Specific, Measurable, Achievable, Relevant, and Timely. But remember, these attributes are only dressing for the core of the objectives, which is to characterize the results your employees wish to achieve.

Once the result is captured on paper, as a sentence fragment, your employees can add these SMART attributes to complete their statements of commitment:

\- **Specific** : the result of what they want to accomplish cannot be too broad, otherwise they end up with a wishlist item. Each objective is one specific step toward overall success.

\- **Measurable** : the objective must be measurable, so encourage them to expand on their sentence fragment with quantifiable statements. Encourage them to think about how their objective can be measured, like comparing before and after measurements.

\- **Achievable** : as mentioned earlier, objectives that are not achievable would be discouraging to your employee and diminish any hope for success. However, make sure the objectives are challenging, so that they have something to fight for, something worth growing into.

\- **Relevant** : the achievement they visualize should be something that is relevant to their role and something that progresses their career forward.

\- **Timely** : add a deadline to the objective. Without holding to a time limit, an objective can quickly be thrown to the back burner because it would lack any sense of urgency or priority.

The only real amount of time it takes to write objectives should be from thinking about the results they believe they can accomplish this year. When they envision themselves achieving each objective, they are succeeding in achieving the desired results. It is this image in their mind that they want to communicate to their manager and to themselves. The rest of the objective statement helps define the pathway to reaching that image, the SMART attributes. Dress it up with specifics, but do not get lost in the details. Keep that image in mind and focus on the results.

### Cascade Objectives

Objectives can be great tools to budget their efforts toward development goals and keep people on track toward individual success. Objectives are specific to the individual, but they could also be shared. Consider encouraging cascading objectives in your company. These are objectives that are written at the top and trickled down to all levels that roll up to that individual. Subordinates will not be able to edit or remove cascaded objectives, but they will surely be evaluated on them.

As the business owner, you may find that there are some very important directives you may want everyone in the company to uphold. These may come directly from the company culture, the mission statement, code of conduct, or specific company goals you set for the year. Write the objective in the first person and start with the visualizing everyone achieving this core mandate. This should come easy to you since these directives would be near and dear to your creation. Make it specific and measurable and add a time limit. Consider delivering two or three top-down company-wide cascading objectives.

Likewise, your department managers should issue two or three department-wide objectives. You should meet with your department managers to train them on how to cascade objectives for their individual departments. Be sure to review these objectives before they go out to the affected employees. These objectives will likely become examples for the employees to follow when composing their own individual objectives. Make sure they are result-driven and include the SMART attributes necessary to make these objectives full commitments of success.

### Competencies and Objectives

Aside from objectives, there is another type of goal setting that can be used, if it makes sense in your company. As we learned, goals motivate employees simply because they allow them the control over their own performance by taking ownership of what is expected of them. Whether we are talking about establishing key competencies to judge, or setting objectives to measure, it depends on the degree of detail. There are advantages to both methods. Requiring objectives and competencies is not necessarily mutually exclusive, so they can both be used, but it may be disconcerting to the employees if they are not set up well.

Regarding competencies, there are distinct differences between key competencies and core competencies. "Core competency", was a term used by the Harvard Business Review in 1990 to describe the process of continuous improvements for a company to reach its long-term goals[21]. Key competencies, on the other hand, are signature skills that employees bring to the table, of which still need to be molded, enhanced, and championed. They are typically broad-stroke improvements making employees more valuable to the company. The biggest benefit of evaluating competencies is that they are predefined and easy to implement into the performance cycle. So, managers and employees work to establish which competencies need to be addressed. This puts focus in the minds of the employees to continuously improve on these hard skills. At the end of the year, judgment is passed on whether or not improvements took place.

Taking the easy road may not give the desired results. One drawback to judging competencies is that they are generic and not at all custom to the individual. Managers passing judgment on competencies is purely subjective. How well you do with a particular strength cannot be easily measured.

Objectives are a little more evolved because they require much more detail that defines particular results that need to be achieved. It is often implied that an underlying competency exists within each objective. Beyond that, though, each one requires a carefully worded statement of commitment that is expected to be achieved by the end of the year. They take longer to prepare and longer to evaluate, but they typically hold much more value, if they are implemented correctly. Objectives are specific to the point they can be quantified and measured. Therefore, measuring the performance of an employee can be justified. We can tie this performance to compensation and feel confident earnings can be validated.

Conceptually, objectives from an employee perspective are the goals set to improve one's own position and career with the company. From the manager's perspective, employees' goals should align with the company goals so that everyone is contributing to the company's success.

Unfortunately, objectives are often time-intensive because of the amount of effort needed to detail out what the employees aim to achieve. Further, objectives should help drive the employees' careers, but should also align with the company goals, also known as core competencies, mentioned earlier. This refinement takes much more effort and it is not always worth the energy. If they are not done right, all of the efforts to create objectives may fall flat if they are not looked at until the end of the year. All too often, managers and employees alike prepare for appraisal meetings by first having to blow the dust off of the objectives, and then familiarizing themselves again with what was meant to be accomplished.

To implement goal settings, choosing between key competencies and objectives may depend on the specific positions and the overall company culture. Consider choosing competencies for use whenever more skill or trade-oriented, blue collar, and labor-intensive positions are prevalent. These types of positions endeavor to hone their skill through training, experience, and mastery. These are the hard skills we discussed in Section 1. Key competencies are more representative of skill-based labor and would prove to drive motivation through continuous improvement.

Choose objectives for administrative roles, any role that involves creativity, or any positions that are results-driven, not necessarily based on how the results are accomplished. These types of positions venture to continuously improve efficiency, processes, and results. Fulfill the learning curve, implement timesaver enhancements, and do more with less. Objectives better fit the customization and specific nature of what people in these roles aim to accomplish. Motivation from objectives should be from the desire to take ownership of the company processes, make them better, and in turn, make themselves more marketable.

Ideally, a balance can be found to blend the best of both competencies and objectives. This is not always easy to do, however. The key may be to introduce objectives systematically and also weave competencies into the company culture. Forcing a blend of key competencies and objectives may not work if they are not used as they are intended. They may not play well together if objectives are vague, and not specific to the individual position or the intended result. Further, they will not flow together well if the chosen key competencies are not aligned with the company's core competencies. Whenever employees are tasked with specific, measurable objectives that focus on achieving a particular result, in coordination with key competencies backed by the company culture, a successful blended goal-setting structure will surface with strong employee motivation.

Objectives are excellent for helping your employees stay engaged, develop meaning in their work, set goals to grow within their careers, and align their efforts to help the company grow. By themselves, they are statements of commitment with the intention of achieving those goals. However, objectives are not nearly as impactful if no one ever looks that them. For many, objectives get completed, but unfortunately, they are often set aside and never looked at again. This next chapter on our path of performance-related concepts talks about how evaluations are necessary to encourage manager-level guidance and help keep your employees committed and on track.

## 2-3 Evaluations

Evaluations hold your employees accountable for the achievement of their objectives and the journey they take to reach them. There are plenty of benefits for conducting evaluations, but the dominant purposes of evaluations are to: keep the employees on track to success in their careers; and, measure their performance to determine the level of commensurate merit raises and bonuses. Evaluations should be a mutual win-win scenario, where everyone is on the same page understanding the expectations and performance, resulting in a justification for adjustments in compensation.

Check on your employees to see if they followed through with what they committed to completing. This should be a regular function within the manager-employee relationship anyway, but evaluations formalize the process to occur at least once a year with specific focus on their objectives. Other benefits of evaluations include encouraging employee engagement by forcing managers to engage with their employees more often. Fostering communication improves the relationship, the understanding, the focus, and better chances for success. If company goals have been shared, evaluations also tend to bring renewed attention to those goals. There are a lot of benefits to tying objectives to evaluations and we can discuss these in greater detail in this chapter.

There is also a lot of talk about how the traditional model of annual evaluations is outdated. Admittedly, this may be some truth to this to a certain extent. The biggest reason is because most managers do not really know how to conduct an evaluation. You will find that there are some approaches to appoint in order to hold successful evaluations in your company.

### 5 Tips for Conducting Evaluations

Your ultimate aim when giving evaluations is to inspire. This process will involve preparation, honesty, and respect.

1) **Prepare in advance:** know the objectives of your employee's performance. It may help to write out the message you want to portray and think about how you want to deliver it. Preparation will ease this meeting, which will likely be stressful for both you and the one being evaluated. Practicing prior to the meeting will help with the preparation.

2) **Don't be a critic:** this isn't a movie. This is part of a process of building up team members. Instead of pointing out failures, talk about how the situation could have handled differently. It is not about passing or failing – leave that in school. There are multiple areas of opportunities and success, each with its own gray area of interpretation. Act like a coach, not like a judge.

3) **It's not about you:** it is about the person receiving the feedback. Going off on an inspirational, preachy rant is not going to be as helpful as giving specific constructive feedback.

4) **Keep it simple:** figure out which areas to emphasize and which to leave out. The guts of the most evaluations can be broken into three areas: content, organization, and delivery. Prioritize and comment only on a couple main points. The entire evaluation should take about 10 to 15 minutes. The remainder of the meeting should be used for setting performance targets and providing encouragement.[22]

5) **Be honest:** anything less is a waste of time and energy for both parties. This evaluation process serves a purpose and the only way to get anything out of it is to lay out the facts. The one being evaluated will thank you for it.

Evaluations are critical to portray the right message to the employee regarding their performance and where they stand in the company. These tips will get you started with performing better evaluations of your employees' performance. However, to truly understand how important these review meetings are, you need to shift your mindset from justifying and critiquing an employee's worth to the company into how to make your employees better.

### Transform the Way You Think of Performance Reviews

Still, year-end evaluations are viewed as an attempt to justify compensation adjustments only without being tied to growth or coaching at all. For this reason, there are numerous problems with the effectiveness of these appraisal meetings. We need to figure out how to design reviews to perform employee coaching as well as measure and reward successful performance. So how can we have our cake and eat it too?

#### Shortcomings of traditional evaluations

Most small businesses carry out annual evaluations in an attempt to justify compensation adjustments. Unfortunately, they completely overlook the true purpose of these meetings - to guide your employees to grow in their careers as well as performance better for the company. Therefore, employees are left with a bad taste in their mouths because reviews tend to trigger fight or flight responses. Employees are forced into negative feelings all of a sudden, which makes it difficult to really hear or focus on everything that is being said. Additionally, annual reviews simply do not occur often enough. These days, the world we live in is changing faster and faster. We need to conduct reviews and engage with our employees more often. Smaller nudges are needed in smaller increments to correct the course of an employee. Your guidance becomes more valuable to the employee.

#### Transform the evaluation process

Evaluation meetings should be transformed from evaluating the worth of the employee compared to their level of compensation to more of a growth-and-development approach. Likewise, leaders would then be identified as coaches and guides, instead of judges. Employees begin to depend on their coaching leaders to help guide them into improving themselves for the company. Appraisal meetings should be held more often to make the employees feel valued. Consider offering coaching sessions quarterly in addition to the annual review. Your employees will begin to view these meetings as more for their benefit for themselves instead of just for the company. We will detail out how to go about transitioning into a coaching environment later in Chapter 3-6. For now, you can imagine the importance to your employees when they have a manager who is an attentive resource, a support center, and a cheerleader.

As a result of this appreciation, employees will actually look forward to having appraisal meetings with their coaches. They will be more loyal to the company and they will have better performance as a consequence. Employee turnover will reduce and your top performers will be more likely to stay. Better overall performance comes from feelings of buy-in and, thereby, have the desire to leave a prevailing footprint in driving the success of the company.

#### 6 steps to transform

Transform what it means to have a performance appraisal. Employee engagement and collaboration will quickly yield results to the bottom line. It will take time and effort to break the mindset and convert to a new review process, but the results will be worth it. Collaboration cannot be encouraged enough. Make the investment in your human resources - your most expensive resource; you will see noticeable improvements in your company's success. Make the effort today. Here is how:

\- Motivate your employees by increasing responsibilities in their areas of expertise. Chapter 3-4 explains how to motivate your employees in more detail.

\- Engage with your employees regularly to let them know they are needed and appreciated.

\- Get your top performers to teach and even coach others.

\- Establish a career path for your employees so employees know what they need to achieve to succeed. Chapter 3-7 talks about how to set up a career path.

\- Encourage dynamic goal management by allowing for ongoing adjustments to objective settings throughout the year.

\- Provide ongoing feedback on those objectives and establish a tailored development plan.

Invest in your human resources by coaching them and helping them reach a higher level in their careers. Along the way, their performance will surely improve and your company will be in a much better place. This improvement from within is organic and it starts with you.

Change is difficult, so you will need to be diligent in getting your staff onboard with changes to your evaluation methods. Keep the annual evaluations, but change the way they are being done by following the six tips discussed above. Begin to conduct annual evaluations from the perspective of the employee. Make it about them.

Add to your annual evaluation meetings with frequent coaching sessions. As discussed above, collaborate and work together with your employees to make them better at what they do. Show genuine interest and applaud them for choosing a path to success. Get them motivated. The energy you put here with return many times over.

Keep the focus on the six steps mentioned above throughout the year. These are big steps that will put your employees in a position to perform better overall. They will feel distinguished, purposeful, and in charge. Getting your employees to take ownership is the bedrock for motivation.

As this section progresses toward more topics of establishing structure for your human resources through performance-related concepts, first we need to make sure we remove distractions along the way. For example, lose the 360-degree reviews. If you are implementing 360-degree reviews, you should consider discontinuing them as part of the transformation.

### My Struggle with the 360-Degree Review

360-degree evaluations do not work. They were developed as an attempt to expand on the traditional evaluations when they were not working well by themselves. They take a lot of strain without resulting in useful information. From an employee's perspective, ranking peers and even one's boss, is, is, gosh, just not a good idea. I mean, first, it's not easy, and it simply can't be worth the time and effort.

#### They do not yield valuable criticisms

Especially in small businesses or small departments, respondents are going to write "criticisms" that are actually complementing the performance of their boss or peer. This does nothing toward the intention of these reviews. They do that because they know what they write will get back to them one way or another. In the end, the boss or peer will likely know who wrote what. So, the employees will rank higher and say good things only to put themselves in good light. Most of us have had enough experience to know not to be highly critical of our bosses, or even a peer you work closely with. Reviewing one's boss precludes you from ranking fairly and offering constructive criticism.

For example, on a question that reads, "does this employee exhibit leadership qualities in the roles he plays in the company", direct reports are going to feel forced to answer in a non-critical tone. "(My boss) is a strong leader: very decisive, engaging, and motivating."

####   
The reviewers are misinformed

Employees may not engage with their peers in other departments enough to know what they do and how well they do it. The same goes with their bosses because information is often on a need-to-know basis. While employees are focused on their own performance and the performance of their staff, they simply do not have any oversight into their boss's job performance. Employee engagement tends to flow in one direction because they will engage their bosses differently from how department managers would engage their staff. The 360-degree review forces them to make judgment for which employees are lacking information. Therefore, they are likely going to be lenient for the benefit of the doubt.

For example, on a question that reads, "does the employee appear to be motivated by his work-related tasks, job, and relationships", employees may have no idea how to answer this for their bosses. It is usually the boss who motivates the employees. Therefore, their answers are likely to be more generic and circumstantial. "(My boss) is always meeting with people and getting projects moving. I find myself motivated by his actions."

####   
The reviewers are biased

Although this review should be about the one being reviewed, employees would naturally be tempted to write about their own biases. As described, employees would typically not have enough information for a valid judgment, so they tend to reflect inward.

For example, on a question that reads, "are there areas of improvement that you would recommend for this employee that would help him accomplish his work more effectively", they may imagine how things would run much smoother if they could change the way certain steps are completed. "(My boss) may benefit from completing leadership reports more effectively by getting data directly from the department managers instead of by a select few employees." Employees would tend to comment with their own agenda. In this situation, the response coming from the one tasked with providing department data to their manager might suggest steps that would actually result in a lighter workload for themselves.

#### They take a tremendous amount of time and effort

On top of other employee reviews to perform, 360-degree reviews are simply more work. These need to be planned, implemented, initiated, and followed up on, separately from the annual evaluations.

Not only is it more work, the mindset has to shift when completing the 360-degree reviews. Evaluations are naturally geared toward reviewing the performance of direct reports, downward in the hierarchy, the same direction information tends to flow. Remember, employees are the recipients of guidance and motivation from leadership and molding subordinates from a traditional model benefits the employees by building their talent and helping their careers. It also means that managers benefit because they can guide performance toward company- and department-wide goals. Evaluating one's boss is not really 100% clear what is expected when reviewing upstream like this. Therefore, employees really need to consider the ramifications of their rankings and what they write. Since employees have to be super careful on what they write without really having enough information to make a confident judgment, this tends to take some time to craft.

Evaluations are critical to bringing value to objectives, as long as they are done appropriately. The 360-degree review is not the answer, but transforming the way you think about evaluations into a coaching role will have you investing in your human resources. We talked about maintaining the annual evaluations, but adding periodic coaching sessions to develop and enhance your employees' ability to succeed. Another tool that will assist with your transformation toward coaching and overall employee engagement is monthly surveys.

## 2-4 Monthly Surveys and Performance Trends

This chapter introduces monthly surveys and the power of performance trends. It talks about the importance of taking notes during the year to capture notable accolades and missteps that your employees experience throughout the year. Understanding and implementing monthly surveys is a prerequisite for achieving performance trends.

### Make Performance Reviews Easier for Managers

Have you ever wondered why traditional performance reviews are only conducted once a year? Why not more often throughout the year? Well, they tend to be heavy administrative work for the managers. It is a beatdown and managers never look forward to evaluations at year-end. There has got to be a better way. There is, but Ironically, it will feel like more work at first.

It's that time again for you to write out your evaluations of your employees' performances. Do you remember how well they did throughout the whole year? Can you remember what that accomplished in the first half of the year? Most managers can only recognize recent efforts and accolades, especially if they have multiple subordinates.

Reviews are heavy burdens to managers because they have to blow off the dust on their employees' objectives and relearn what was written. These carefully prepared statements of commitment and goals are completely forgotten until it is time to review them. They struggle to remember how their employee acted on these objectives during the year. It is exhausting having to focus and remember these for every one of your employees. For this reason, managers generally dislike the traditional performance evaluation process because it equates to additional administrative work on their part. But there is a better way. In fact, there are two big changes to this traditional model that would make this process better for managers because it spreads the work throughout the year.

First, managers should take private notes during the year. This sounds intuitive, yet most managers do not bother. Each year, a manager should keep a notebook or document file handy so they can make notations throughout the year on each employee. The notes do have to be formal and do not necessarily have to be done at a designated time. However, they should keep all notes in the same place - a single notebook or document file. It makes it easier to find to keep a level of consistency. Anytime a manager takes notice of an employee's actions, they should do more than make a mental note; write it down to be referenced later. All warnings, lessons, praises, and accolades need to be included. Additionally, note taking should be done periodically at even intervals. You may prefer to schedule reminders monthly or quarterly. By the end of the year, you will have plenty of ammunition to use to quickly wrap up each performance review. Instead of dreading each evaluation, you will be able to step into it with enthusiasm.

Second, managers need to review their employees' objectives many times during the year. This would not be a formal review and managers do not even need to meet with the employees. Reviewing the objectives reminds the managers over and over again what each employees has set out to do. Keeping this in mind makes it easier for the manager to take notes on what each employee has done in relation to those objectives. Reviewing these quarterly is good, but monthly would be better.

These two changes would spread the workload throughout the year and would provide the managers with the engagement they need to be better managers. By the time the year-end evaluations come around, they will be thankful they kept these notes. Managers will be much more prepared to address their employees and even surprise their subordinates with their thoroughness because they can refresh their memories quickly and clearly. This preparedness will even benefit the employees because managers can keep the focus on them meeting objectives based on their actions.

Year-end performance reviews tend to be heavy administrative work for the managers. There's a better way. Stop the frustration of poor recollections and weighing too heavily on recent actions. Jot down what your employees have done for you during the year and review their objectives throughout the year. You owe this little bit of effort to your employees. Just two changes to the traditional model will get managers to spread the workload throughout the year and they will become better managers along the way.

### Consider Monthly Review Surveys

What if you could rate your employees at each interval? In addition to taking a few overall private notes, you should consider implementing monthly review surveys as part of the performance review process. Managers would simply have to conduct a one-minute star-rating review on each of their employees once a month. Similar to rating your most recent movie rental, monthly surveys are designed to quickly and accurately rate the performance of each employee based on the employees' objectives. No comments are needed and no follow-up appraisal meetings with the employees are required, however, it is recommended to engage employees casually at least once a month to go over progress and accomplishments as well as guidance and coaching. They should not replace the note taking throughout the year, but complement it. Each survey should only take about one minute per employee per month. The value of monthly surveys is immense because it does away with some bad habits and it establishes new metrics for measuring performance.

Monthly surveys can put to bed bad habits that have formed over the years with regard to performance reviews. No longer will your managers conduct annual appraisal meetings unprepared. They will have information on milestones that took place evenly throughout the year, not just the most recent recollections. They will be better set to measure performance objectively and minimize any subjective ratings. By introducing monthly surveys, these bad habits can be fixed, in addition to adding new metrics for measuring performance.

This constant review keeps these objectives fresh in the managers' minds throughout the year. The little investment in time upfront saves a lot of time later on when managers begin to prepare for the appraisal meetings because much of their work has already will have been completed by then. Furthermore, managers would be able to evenly represent actions taken over the year. Commit the attention of your managers without bogging them down.

So far, we have discussed ways to drastically improve the traditional evaluation model. Spend the time to make objectives meaningful, and aligned with the company goals. Then, don't just file them away. Review them periodically by conducting monthly surveys and taking notes throughout the year. All of these steps progress into reducing the pressure of the year-end evaluations and provide multiple touches with each employee. Coaching and continuous employee engagement (coming up soon) will improve performance. And, the magic of performance trends will come alive to show you new insights into the performance of your staff that you have never seen before.

### Performance trends

Monthly surveys yield captivating results by providing trends on employees' performance throughout the year. The traditional model, which trends performance once a year, demands too much pressure for improvement in each big step. Now you can oversee trends as they happen and take appropriate action when needed right away. This built-in function is where littleHR.com really differentiates itself. Trends are key metrics that analyze and quickly identify changes in pattern. These changes can classify an employee's performance. For example, you can quickly identify an employee on the fast track to success, a complacent employee plateauing, and a disengaged employee spiraling downward. Use performance trends to monitor changes in employee performance, which has multiple game-changing benefits:

\- Identify adverse changes early so you can address them sooner before they become a larger issue or before your employee walks out the door. If the performance suddenly becomes erratic or unexpected, it may be time to intervene before it is too late. One of the biggest advantages to performance trends is to clearly see such changes during the year. Subtle changes may go unnoticed until you see it on a chart.

\- Identify your star performers, who may be your go-to people for solutions. These are the employees that best represent your company, they have the most knowledge of your products and services, and they can be used to help train others. Your top performers should be the ones that eventually become your department managers. This is critical to know who your champions are, and the sooner the better. Likewise, you would want to know those who are underperforming. It would be in the best interest of the company if you dealt swiftly and justly with them. See Chapter 2-6.

\- Enable a profit sharing process that pays out frequently during the year, such as quarterly, which tie back to the company's quarterly financial performance. If you have ever considered a more frequent way to give back to your employees, profit sharing is the type of bonus structure you may need. Utilizing performance trends is the best way to measure who gets what share for something more frequent than once a year. More on this in Chapter 2-7.

\- Keep your managers familiar with their employees' objectives so they can encourage them to meet these goals throughout the year. As discussed already, managers should take notes during the year and acknowledge the objectives set by the employees multiple times a year. Monthly surveys require managers to rate those objectives every month, thereby producing the performance trend.

\- Encourage employee engagement from your managers, who should hold multiple casual discussions throughout the year regarding performance. We also talked about the importance of coaching in place of judgment reviews. These need to be periodic and they could easily follow the monthly surveys.

\- Break the mold and change your method of conducting performance reviews; no longer blow the dust off of objectives at year end. We established this as a critical point to collaborating with your employees, so they know where they stand and what is expected. Get them to take ownership and hold them accountable.

\- Justify changes in compensation by maintaining support of a monitored performance trend. Make your changes based on quantifiable evidence. Another key outcome of the performance trend is that you automatically have a documented basis to justify pay adjustments.

Performance trends opens to door to making smaller course changes more often throughout the year. They are more than a result of using monthly surveys, they are the metric you can use to analyze and take action. There are many benefits to studying these nuances throughout the year. Some were already discussed and some of the other points above will be elaborated more in the coming chapters.

##

## 2-5 Tie Compensation to Performance

Make your employees earn it. There are varying degrees on how well someone could fulfill their job duties. Job performance matters because it links back to behavior, attitude, values, and shared goals. Reward your top performers while holding back on others that are less deserving. Remove favoritism and subjective considerations and base their pay solely on their performance. Apply predetermined rates based on the performance that was scored.

Scoring performance is designed to have an impact on both their annual merit raise and bonuses. Remember, performance tracking from monthly surveys enables you to successful calculate more frequent profit sharing payouts, such as semiannually or quarterly. Chapter 2-7 details how to implement profit sharing in your business. The important point here is that employees earn more if they perform better because your staff's actions directly impacts your company's success.

As discussed earlier, employees perform better when they are frequently engaged and coached. Now that their actions are knowingly tied to the success of your company, it becomes natural to show genuine interest in the success of your employees. However, if poor performance continues to go unchanged, at least you will have identified who those employees are. Not only will they be passed up for raises and promotion opportunities, but your underperforming employees should be on the short list to be removed.

## 2-6 Release Underperformers

Your underperforming staff weigh your company down from reaching successful growth potential. Whether they are slow to learn, unable to change or keep up, or have an unruly behavior, you need to begin documenting the justification to let them go. No one is irreplaceable. Contrary to small business mentality that things will change, the longer you wait, the worse the situation will become in reality. If after offering many chances to succeed and you are still disappointed, you need take action. This means you should begin searching for new candidates and, at the same time, take steps to justify a termination in the near future.

### Performance Improvement Plan

There are times when an employee slips in recent performance and it comes down to writing up a plan to help them improve. Performance Improvement Plans are generally issued following multiple attempts to correct an employee's performance. Employees identify with this and will either improve or end up terminated.

A Performance Improvement Plans (PIP) is official documentation in the employee's personnel file. It is intended to help employees, but it is often associated with a disciplinary action, reprimand, or blemish on their record, thereby precluding them from a raise or promotion. However, managers should help employees understand that a PIP is not the cause of a poor service record; it was their preceding performance that caused raises and promotion to be held back. It is a negative situation to have to receive a PIP because it is essentially an ultimatum: either make strides to improve or leave the company. It also builds ammunition of justifiable support if the result leads to termination. Documentation of this nature is the justification a company needs to successfully avoiding wrongful termination claims. However, the PIP itself really is a tool intended to help the employee improve their performance. It lists specific steps for improvement necessary so to give renewed focus to the employee.

The mechanics of what is put into the performance improvement plan is critical to getting your employees on the right path. The plan is a signed agreement between the manager, employee, and HR representative. It includes specific examples of problem areas, points of improvement to the satisfaction of the manager, scheduled follow-up meetings, and an end date or term. The points of improvement should be listed as actions necessary to achieve objectives and actions necessary to demonstrate behaviors, both with measures for success. Further, the scheduled follow-up meetings should be set weekly until the end of the term, which is usually limited to three or four weeks. A PIP is an investment in time and effort for your employee because it is demanding for the manager as well. It is usually cheaper and easier to salvage a poor performance situation than deal with turnover. The components of the PIP need to be carefully worded to direct the employee to their best chances of success.

For the PIP to exist in the first place requires a means to identify poor performance. Since is it subsequent to prior performance discussions and written notices, a PIP should be based in some level of a performance measurement structure. It is not uncommon to require a PIP if and when an employee is rated lower than the midpoint, typically lower than a 3 in a 5-point scale following annual performance evaluations.

The ultimatum of the performance improvement plan leads to either a definitive improvement in performance or the company and employee parting ways. The advocacy of a PIP for the employee striving to improve is the realization that their performance is bad and make changes to behavior, approach, time management, etc. Many times, communication is all that is needed to help the employee understand and identify where they misstep. Employees are forced to reevaluate their inner desires and goals in life. After balancing that against their behaviors, they come to terms with their position in the company.

Suddenly, you see a renewed perspective from the employee in these cases. Contrarily, the employee may come to realize this job is not for them. You helped them realize that they need to move on, to find a job that aligns more with their interests and passions. In this case, too, you would be doing them a favor.

The idea of a Performance Improvement Plan (PIP) was created to best deal with an unfavorable situation with the interests of both the company and the employee in mind. It is a formalized evaluation to correct particular behaviors. The PIP is tinged with negative connotations, but it is important to remember the benefits it can bring. It is an ultimatum, which is necessary for the employee to realize how the path they are on is not in favor with their employment. Only the employees can change their own behaviors, so it starts with communication and realization. Nevertheless, the PIP will result in a better situation for the both the company and the employee, regardless the path chosen by the employee.

### A Blessing In Disguise

Releasing those that cannot seem to cut it may be difficult to do at first, but, remember, you may be doing them a favor. Employees tend to perform poorly when they are not happy with their jobs. Why they are unhappy is very likely due to a mismatch with their passions and what they are good at. They tend to obsess over upcoming weekends and may contribute the bare minimum. Yet, they may not think about the possibility of other jobs better suited to their tastes. They may be just content enough to continue with the status quo. An awakening to their livelihood may not be a bad thing. Consider that they may otherwise be experts in another area working for a different company with different values. Help them find where they will be more satisfied with their career somewhere else. Feel good that this decision will be a blessing in disguise for them and a win-win all around.

Regardless of whether this holds true with your poor performing employees, you absolutely must hold strong to your determination to successfully grow your company without letting anyone stand in your way. Do what needs to be done and do it soon. The only thing to do prior to your conversation with these employees is to justify your position so you can successfully defend your actions, even for at-will employees.

### Justify Terminations and Pay Adjustments

The final decision has been made and now is the moment to share the good news with one of your top performers. As it plays out in your mind, you are the hero. "Congratulations, you have been given a raise. We are prepared to award you with a 5% merit raise effective immediately." You envision the surprise and delight in your employee's expressions. However, it actually went down a bit differently. Why wouldn't she be happy? "I am grateful, but I was expecting something closer to 10% after working so hard to secure so many great wins for the company this past year." Before the stun could wear off, she then asked how her performance was measured and how this rate was allotted. Unless you can justify your position, you will not be able to answer.

You may walk away wondering the same. At the same time, someone in another department is getting let go today due to poor results. Let's hope they do not think it is a wrongful termination. Maybe there should be some history, some sort of documentation. We need to support our decisions, decisions that impact people's livelihoods.

Terminations can be challenging, even in an at-will employment arrangement. Despite the fact that you do not need just cause to terminate an employee, there are a few ways a termination could land you court. So, your justification for the termination needs to be documented thoroughly. As explained in Chapter 1-2, reasons for complications include wrongful terminations (e.g. discrimination), not honoring implied promises (e.g. permanent employment, pending promotions, etc.), breaches of good faith (making conditions unfavorable so the employee wants to quit), violations of public policy (e.g. disallow jury duty, voting rights, military duty,etc.), and retaliation (e.g. whistleblowing).

Just to be safe, take the proper steps that lead to a termination and support each step with adequate documentation. First, address the situation with the employee, but get them to sign a summary of the discussion in writing at that time. Then, put the employee on a Performance Improvement Plan (PIP) that clearly details the steps necessary to succeed within a specified deadline. This document needs to be signed by the employee and manager. If the requirements are not met by the deadline, the employee should not be surprised by the termination. At the time of termination, the employee should be encouraged to sign an acknowledgement. Getting the signature here is easier when there is an additional severance pay on the line. This level of documentation should provide sufficient evidence that would dispel false claims to the termination.

The same level of scrutiny goes for pay adjustments as well. Let's review some ways your small business can justify pay adjustments and terminations:

1) **Require objectives:** the company first needs a way to measure performance. This begins with objectives set by the employees. Then, managers should review the objectives to ensure they align with the company's goals. Once approved, they should be reviewed regularly.

2) **Require evaluations:** the performance of the employees need to be measured against the objectives that were set. Official evaluation sessions should be held, not only to help guide the employees to trend toward accomplishing those goals, but to also document the progress.

3) **Document everything:** an HR representative or record-keeper has to make sure any accolades, rewards, reprimands, and improvement plans are documented, signed, and filed appropriately. These can be used as evidence to justify the employer's actions taken in the future. By keeping it part of a standard policy for everyone, you are building a just-in-case scenario so that you are sure to protect the company from unforeseen claims in the future.

4) **Get signatures:** HR needs to have all employees sign employment contracts or at-will agreements so that everyone is aware of their professional duty requirements and rights.

5) **Preset rates for performance:** set predetermined rates for merit raises and profit sharing bonuses based on performance that applies to all employees.

6) **Take notes:** managers really should be taking notes regularly throughout the year on all of their employees. It benefits themselves as a means of spreading out the heavy workload of the year end performance reviews. It also benefits the company by building ammunition in the name of documented support and justification.

7) **Justification:** internal written documentation regarding accolades and rewards support the decision to issue raises and bonuses. It also helps distinguish between the degrees of good performance between employees. Again, stick to the standard policy to get acknowledgements from the employees as you would for demotions and terminations.

This situation is unfortunate, but it is not really all that uncommon once the veil is lifted. Bringing structure to your HR has allowed you to definitively identify those who fit with your company and those that would likely perform better someplace else. Act quickly on this if you want to improve your company's bottom line. Take the hard steps to move forward now. For the remaining employees, those that contribute toward the success of your company, there is more work to do so that they are rewarded appropriately.

## 2-7 Profit Sharing

Profit sharing is the best way to enforce a pay-for-performance model, which is necessary for tying performance to compensation. Even though they might not have a stake in the business, profit sharing feels as though the employees are owners of the company because it is giving them a degree of control into how much they can earn. They will feel that their actions and performance will have a direct impact on their share of the bonus. It is an important source of motivation. Monthly surveys discussed in Chapter 2-4 permit profit sharing bonuses to be paid out more frequently than once a year. This would help disassociate bonuses from the holiday season.

### Kill the Holiday Bonus -- Pay for Performance Instead

The holiday season is coming back around quicker than you think and company bonuses will soon follow. Regardless of their quality, work ethic, or performance, employees are lining up to receive theirs as if was already entitled. Consider ditching the holiday bonus and convert to a pay-for-performance model.

Two employees who work for a small business are eagerly awaiting their Christmas bonuses. Diane has worked hard all year and feels she has earned it. Steve generally scoots by with minimal effort and thinks of this bonus as part of his salary. Diane's performance was above and beyond the owner's expectations because she works well with Operations and seems to accomplish quite a bit of work. She is a go-getter and takes it upon herself to follow-up with other departments. Steve always feels behind in his work and complains about how the Production Department's slow turnaround causes delays in the completion of his own work. He feels cheated due to the fault of others. So, is it fair that both employees receive the same bonus?

On a pay-for-performance plan, Diane and Steve would _not_ receive equal bonuses. Awarding bonuses based on performance also allows you to identify and ultimately release those underperforming because the pay-for-performance process puts a spotlight on those individuals. Additionally, paying profit sharing in place of bonuses relies on the performance of the company in each period. For example, let's say profit sharing budgets are tied to earnings on a quarterly basis. If the company does well, the profit sharing payout budget would be larger. Quarterly profit sharing would forever disassociate from year-end holidays. This change would allow you to better manage your human resource. Here is how it could work:

\- Introduce an HR management tool for your employees to use; consider using littleHR.com. You will want to utilize a tool to help manage this entire process with ease.

\- Require your employees to complete objective settings.

\- Have department managers evaluate the performance of each employee based on their objectives, more than once a year.

\- Rate each employee based on their performance evaluation.

\- Rate each department compared to other departments as an optional multiplier.

\- Share profits instead of paying bonuses, based on the performance of the company.

\- Pay performance profit sharing annually or even quarterly.

\- Forever disassociate performance bonuses, or profit sharing, from year-end holidays.

\- Release your underperforming employees and promote your top talent.

HR management starts with performance evaluations and adjusts compensation accordingly. Consider a more frequent profit sharing payout, such as quarterly. If the timing is set to annual payouts at year-end, disassociate it with the holiday season as much as possible. It is important employees do not view the bonus as if they were already entitled. Quarterly or semiannual bonuses immediate help to dispel the association with the holiday season.

Pay-for-performance allows you to act on your performance evaluations, not only for profit sharing, but also to justify releasing underperformers and promoting your top talent. Evaluations also provides you with track records. Using littleHR.com encourages you to act on these trends as you would for any other cost control metrics. Holiday bonuses should no longer be entitled as part of employee salaries; make them earn it and better manage your human resources. After all, it is your most cost-intensive and most important resource.

### Introduce Profit Sharing to Your Employees

1) **Transition:** introduce the concept of profit sharing to replace your traditional annual bonuses. Explain how it will pay larger shares to those employees performing well.

2) **Preset frequency:** determine how periodic you are comfortable paying profit sharing bonuses. Setting them to a semiannual or quarterly basis will be most successful at disassociating bonuses from the holiday season. Additionally, profit sharing is reliant on the company's success as a whole. Be consistent throughout the year and hold strong to your promises, even during tough times.

3) **Eligibility:** determine who in your company will be eligible and what the criteria is to be eligible. This should be based on role or performance success thresholds and never based on relationships or personalities. Keep it professional and justifiable.

4) **Share the results:** commit toward being transparent on the company's financial success. If you want to empower your employees to align their goals and represent your company wholeheartedly, they need to be trusted with the results. More information on empowering employees is available in Chapter 3-5.

5) **Define your preset rate:** predetermine the percentage of total revenues that you are comfortable sharing with those eligible. You will need to commit to this rate even before knowing the results of future periods. Consider communicating this rate structure to all of those eligible to receive bonuses. Attempt to hold strong during the year to maintain that rate. For example, if you decide to commit to 10% of earnings, try not to deviate from this during the year.

These steps will help you set it up so everyone is on board. Most employees would support this change because it gives them a sense of control; the better they perform, the more compensation they will receive, not just in their share, but also in an increased overall budget. Your employees success becomes the company's success as they work hard to drive high financial results.

### Calculating Profit Sharing

Profit sharing is a weighted average calculation on who is eligible to receive what share of the total budget payout. There are a few steps to follow to make sure this calculation is done right:

1) **Predetermined rates:** before you calculate any earnings, you should first determine what share rates you want to award based on the different levels of performance. Perhaps the best starting point is to place a value of 100% for the middle level of performance. Then you can increase the share rates for the upper two levels of performance and significantly reduce them for the lower two levels. For example, you may want to set them at 200% for your top performers, 150% for excellence, 100% for strong employees, 50% for struggling performers, and 0% for unsatisfactory performance. This means your top performer will earn double the share as a strong employee.

2) **Measure performance:** follow through with evaluations and monthly reviews so you can track a performance trend and know where your employees stand throughout the year.

3) **Determine the total budget payout:** regardless of how you determine the total budget, whether it is locked at a static amount, or a percentage based on gross sales, gross margin, net earnings, etc., be consistent and only make changes between years. Otherwise, your employees would question whether a moving target of underlying values only change in favor of constantly minimizing the payout.

4) **Associate the rates to their performance levels:** apply the predetermined rates for each of the employees based on their individual performance.

5) **Calculate a weighted average:** multiply each share rate by the total payout budget and divide it by the sum of all the share rates. For an individual, this will be the amount of his or her payout. To double-check for accuracy, add up all the individual payout amounts and make sure it adds up exactly to the total budget payout.

The implementation of profit sharing is an important step toward making your employees truly earn their compensation. It is the result of setting up pay-for-performance, but more importantly, profit sharing helps motivate your employees to become better at what they do. This structure drives better success for your business because your employees are motivated to perform better and get rewarded. With less turnover and better overall quality output, this incentivized approach leads to a stronger bottom line. The tracking and calculations needed to implement profit sharing, and the underlying pay-for-performance tracking will require the use of an HR management tool like littleHR.com.

## 2-8 Structure Your HR By Using littleHR.com

HR tools, such as littleHR.com, help you build the structure you need to improve your bottom line. It provides the foundation to enable pay-for-performance, so that your employees are incentivized to improve their performance. It enables your employees' efforts to be aligned so that their success is the company's success. At the same time, it spotlights your top performers and roots out the ones not pulling their own weight. Stop the status quo and make the necessary changes by checking out littleHR.com today.

#### Pay-for-performance

_Objectives_ provide your employees with guidance to advance their careers while managers approve whether they align with the company goals. Easy-to-complete forms help employees create SMART objectives with a helping hand. Finally, meaningful objectives to establish purpose. Setting objectives is an important way to establish your company's core values and keep the workforce focused on purpose-driven continuous improvement.

_Evaluations_ allow you to establish justification for terminations and promotions and lay the groundwork for stronger performance expectations. Simply apply a star rating and write comments as they apply to each objective. Self-assessments, mid-year, and year-end reviews build a sense of purpose, motivation, and career path for your staff. All of this is saved in a central location that can be referred to at any time.

_Compensation_ manages your employees' earnings and performance trending and summarizes them at a glance. Justify merit raises, profit sharing, pay-for-performance raises, as well as bonuses. Kill the holiday bonuses and justify improvements to behavior, productivity, and conduct. littleHR helps you set up periodic bonuses and make your employees earn their pay. You can even set multipliers for departments and a budget based on company-wide performance. Once you set your rates and evaluations are done, all of the calculations are done for you.

#### Keeps information fresh for managers

_Monthly performance surveys_ make rating employees' objectives a snap. Like rating a movie rental, each month, your managers build a living trend for each employee's performance. _QuickNotes_ is offered for your managers to make internal notes on each employee as times of recognition or disciplinary action takes place. This makes it easier to remember later when conducting year-end reviews. QuickNotes make it easy to jot down notes all in one place.

The _Time-Off Calendar_ is your company's HR events record consolidated in one place. Accompanied by Paid Time Off requests, everyone can also see upcoming HR events, such as open terms for objectives and reviews.

#### Eliminate uncertainty and circulate HR policies

_Email reminders_ tell you when it is time to complete objectives, reviews, compensation work, PTO approvals, etc. It keeps you on task without drowning you in notifications. Email reminders include links that will take you where you need to go in littleHR.com.

Your _To-Do list_ is a customized notification at the header made up of dynamic links that will keep you in step. There are plenty of practical notifications into littleHR.com because communication is vital to employee success.

_Cascading objectives_ is a powerful option for your subordinates to inherit shared department or company-wide objectives to be graded on. For each one, you decide who gets them, from a single person to the rest of the company.

_Tooltips_ embedded throughout littleHR.com not only tells you how to use each function, but it provides advisory tips as well. Many come with recommendations based on certain criteria.

_HR Advisor_ provides guidance through a wealth of articles, blogs, and social media inserts that will directly relate to small business issues with HR and employee relations. Most of the topics covered in this book are included, but it is an ever-expanding knowledge base ranging widely on useful content right at your fingertips.

The _Organizational Chart_ is an auto-generated hierarchical chart based on the employee-manager relationships you establish at setup. Click on each employee to view an overview of who's who. Toggling to a dynamic _Employee Search_ finds who you are looking for fast.

#### Tear down the walls between employees and HR

New employees expect interactions to happen as easy as shopping on Amazon. That calls for instant feedback and catering to the employee. littleHR.com enables quicker feedback from managers and HR:

_QuickNotes_ is an internal messaging feature that allows you to keep your own notes or submit those notes to any other employee, including questions or anonymous suggestions to your HR rep. This opens the door to communication by offering a central hub to message others. This is the perfect platform for company memos, policy updates, and announcements. It is also the location to submit recognition points that can later be redeemed for rewards.

_Employee Satisfaction Surveys_ are very useful for determining what areas management needs to improve on to raise overall job satisfaction. This comes with preset default questions for you, and then aggregates the answers in a visual format for quick reference.

HR tools like littleHR.com provide the foundation for you to bring structure to your human resources. Align the efforts of your staff to drive productivity and performance toward the success of your small business. Your employees' success is your company's success.

Beyond furnishing a platform for you to build an HR structure, littleHR.com also enables you to better engage with your employees, which will be one of the focuses of the next section. You will have the tools you need to reach higher levels of profitability through organic growth, building bridges with your employees, keep information at your fingertips, and empower your staff. More than our signature features, you will find an ample amount of value-added tools to help you better organize your human resources. littleHR.com can help.

Beyond compliance, this section has revealed many ways for you to take control and bring structure to your human resources. The intent is to train you how to make use of this resource to produce noticeable improvements to the bottom line. Money that you invest into this resource will return to you many times over. By getting your employees to set meaningful objectives, measuring their performance, and holding them accountable, you will reduce turnover and gain higher revenue. This is due to bringing renewed focus to your staff, so that everyone is marching to the same beat. The built-in stimulus in pay-for-performance encourages your employees to improve their individual performance levels and, as a result, the overall performance of the company. If you managed to reach this level of HR structure, congratulations. You are on the right track to success and you are primed to go to the next level.

We are not done. We can build onto this HR management progression even more, going from improving your bottom line to where your small business can achieve healthy, controlled organic growth. You will be able to scale your business by expanding from a team of qualified individuals to a large team of qualified departments. The next section teaches you how to maximize your human resources to get the greatest potential for growth. Many of the topics already discussed here are part of this progression. We will build on these concepts so that you are able to implement them with confidence. Section 2 was designed to teach you how to take control and begin to lay down a foundation structure within your human resource. The purpose of Section 3 is to provide you the insights to maximize the potential of this resource so that you can see expansion and growth in your small business.

# 

# Section 3 - Maximize Your HR

Closely managing any resource will yield a return on investment. Managing your largest and most expensive resource will have remarkable potential for growing your small business. The secret to maximizing your human resources is to get your staff to be as passionate about your business as you are. As long as everyone is marching to the same beat, put your employees in charge and see the magic transpire. To make this happen, the concepts in this section require work on your part; investing in your company is the only way to make it grow.

This section will explain why it is important to respect and engage your employees, empower them, coach them, and be benevolent towards them. This will put value into your employees. We will discuss motivation through empowerment in detail. At the same time, you should establish a career path for your employees, where you will lay out the details of each employee's job description and pave a path for each one to grow. Additionally, you should recognize and promote your top performers to leadership roles. Then, build a company culture of significance and pride that everyone could stand for. After you have everything in order, you can follow up with training and initiate cross-training. Through improvements made to job satisfaction, increased motivation, an enriched company culture, and defined career paths, you will be making your company a place where the most qualified people want to work. Your focus should remain on your employees because it is through their success and growth that your company will grow as a result.

## 3-1 Treat Your Employees Better

Instead of throwing warm bodies at a problem, or using and abusing good people, you will find that you can go a whole lot farther by treating them as champions of your company. Not just representatives, but the ones that really carry your company. The way you choose to treat your employees helps define your company culture. The mind shift starts with you to recognize the fact that, without your employees, you would not have a business. And the only way to grow it will be through the aspirations of your employees, so be sure to treat them well.

### Be A Good Boss

You can choose the kind of boss you want to be. It is up to you to determine your behavior and level of interaction with your employees. Be a good boss and reap the benefits. There are many ways you can approach this goal to help you be a good boss.

Why should you worry about the kind of boss you are perceived to be? Mostly because it will ultimately help bolster your bottom line. Consider what increased performance, stronger motivation, and less turnover could do to both raise revenues and reduce costs. If you could inspire loyalty and trust among your employees, they will put more of themselves into their career, and by extension, your company. They would see it as more than just a job to pay the bills. You want them to start with that sense of belonging and build it into a team working together. Inspiration can yield profound ideas that will improve processes and save time and money. Your team will feel more free to face the hard truths about your business and recommend changes that will benefit the company because of that buy-in we discussed in Chapter 1-4. Lastly, recognition and other positive reinforcement can return even higher job satisfaction, which further strengthens your company's output.

Being a good boss can inspire your staff to work for you, not just the company, and not just as a mere job. Since your employees spend so much of their lives at work, they need to feel they belong. They need you to welcome them into their position and treat them with respect. This can all be done without losing your edge. After all, you do not want them to confuse generosity with weakness. It is all about how you approach your staff and how to treat them overall that matters. Here are some action steps on how you can go about becoming a good boss:

1) **Engage your employees:** communication is key to everything that involves interaction. More than communication, engagement shows your interest and drive to reach a level of success. Employees will see that drive as a mechanism to get them to achieve that success as well. For further regular engagement opportunities with your staff, you could hold quarterly or monthly town halls, or simply hold periodic meetings. The purpose of these would be to keep everyone informed of the progress toward your company goals and the work left to do. The underlying motive for engaging your staff is to share information. Chapter 3-3 has more information on employee engagement.

2) **Share the why:** consider providing some degree of transparency. Remember, you want to gain their trust. Share why the company is in the industry it is, why it performs the way it does, how it holds up to the competition, and the financial direction of the company. Share why you have selected the individuals for their teams, why you promoted your leads, and the goals of the departments. Additionally, explain your role and what you can do to help the teams.

3) **Define your role as facilitator:** that means you support the other teams and all of your employees. Find out what they need in order to accomplish their goals and get it to them quickly. Answer their questions, and revel in the shared excitement of working together to accomplish something great. As a facilitator, you are limiting your own control, which means that you have to stop micromanaging. You need to learn to let go and trust your employees to complete what they set out to do, under limited supervision and review, of course. On the other side of the same coin, you cannot just give general orders and no longer be present. Your presence is mandatory to run things from top down. The only way to strike that right balance is to embrace the organizational hierarchy. Of course, this means you have to set up your teams and team leaders.

4) **Empower your employees:** learn to delegate and give them the power to own their work and get results. After selecting your team leaders, you only need to give them goals and deadlines. Work out the details with them and be sure to hold them accountable. Then, allow them to control their teams to carry out their workloads. This goes back to maximizing their performance and helping get to a better bottom line. Chapter 3-5 has more information on empowering your employees.

These are the steps you should follow to begin being a good boss. You should also work with your department managers to make every effort to be a good boss for their direct report employees as well. Your bottom line and reputation will thank you for it. Once you have established yourself as a good boss, you can still take on a more serious tone.

### Be Rigorous, Not Ruthless

Your employees crave guidance, but they do not want to have to walk on eggshells to get it. You can provide that guidance by updating your existing company culture and best practices. How to create a company culture from scratch will be explained in greater detail later in Chapter 3-10. Immediately, you will need to be rigorous with your staff to get the results you envision. This might mean making personnel changes as needed, right away. "To be rigorous means consistently applying exacting standards at all times and at all levels, especially in upper management. To be rigorous, not ruthless, means that the best people need not worry about their positions and can concentrate fully on their work[23]." Ruthlessness is a distractor because your staff would constantly be too concerned over their employment rather than focusing on achieving results. Being rigorous, instead, will yield a better company culture where processes flow quicker, results are more impactful, and things get done.

It starts with you, but incorporating a rigorous attitude to your existing company culture can quickly be extended to other department heads, and ultimately to each employee. Without a rigorous nature, you may be inviting bureaucracy and gridlock set in. When people talk about a process "because it was always done that way," you know you will need to make a change.

Being rigorous also means making those tough HR decisions and moving quickly on them. This should only be necessary when work performance does not measure up to the best practices you set. It is not ruthless when you are attempting to grow your business with the right people. All too often in small businesses, underproductive employees keep receiving a paycheck. This cancer spreads throughout your workforce as more and more are doing less and less. Soon it feels like pushing a boulder around to get anything accomplished. Not only are you frustrated, but your employees' job satisfaction drains away. You may even know the one or few at the heart of the problem, the ones that needs to go. Perhaps you find yourself struggling to make attempts to work things out, give third or fourth chances, or wait for things to improve on their own. The profound truth is, it not only hurts your business, but you are in fact stealing precious time in their lives they could be searching for their passion or a position at which they would excel. If you think about it, that could be considered ruthless. Deal with it now. When you know you need to make a personnel change, act. Push through that resistance and restructure your personnel.

At the same time, you will want to look to bring on fresh employees to match the renewed company culture you plan to uphold. Sometimes, complacency of former employees precludes them from changing their work behaviors to fit the new structure. Change is difficult for some. But if your business cannot change, it will die. Hiring from a new perspective will likely lead to finding the right employees for the job. For applicants that only kind-of match or sort-of fit, you should pass. When in doubt, keep looking. It will be better worth your efforts to end up with the right fit instead of settling.

Do not put your top achievers onto your biggest problems, but instead put them on your biggest opportunities. Common practice is to assign your top performers to pick up the slack of those dismissed. That is a quick way to burn out your top talent just to maintain the status quo. It would wiser to assign them at opportunities that can lead to something great for your company. Keep your top performers positively engaged and they will help advance the new company culture by example.

At this point, you should already be upgrading the culture within your company: you set your best practices with a rigorous tone, not leading by fear; you trimmed away dying parts; and, you introduced new faces ready to get started. The next steps will help complete your inception.

Remember, you want to create a culture where people have a strong opportunity to be heard and truthful. By establishing your best practices and consistently being rigorous, everyone's entire approach will be lead with inquiry, not excuses. They will want to tackle issues and improve processes. Moreover, you will want them to engage in discussion and debate on process improvements and best practices, not be pinned down from coercion in a ruthless culture. Digging deeper yet, your rigorous culture should allow for the examination of failures without pointing blame. What is done is done, now let's figure out how to avoid it in the future. Finally, you will be better able to establish metrics and set thresholds that will raise red flags when results are less than expected. Best practices and a stronger company culture driven by a rigorous nature will allow you to face bad news head-on and rejoice in success.

You do not have to be a ruthless SOB just because you want to create change in your business. A rigorous approach gets your employees on your side, united as a team. That is type of environment you should want to cultivate. Build up your team with the best fitting people. If you have to make a personnel adjustment, do it right away. Use your renewed company culture to open yourself and your business to your employees by getting their buy-in and their ideas on how to make processes better. Learn from mistakes without blaming, and then encourage your employees to raise flags when things go sideways. Let your employees take comfort in knowing their hard work will be rewarded. Knowing that, they will be able to focus on achieving the results you envision.

You may feel like, by implementing these game-changing approaches, you are walking the line between good and evil. Remember that your employees should not confuse generosity with weakness. You can be wildly supportive of your employees _and_ set high expectations for them to maintain at the same time. To further clarify the distinction, let's apply this to pop culture.

### Managers Can Bring Balance to the Force

Take lesson from the Star Wars[24] saga by reflecting on some of the attributes of the light sideン and dark sideン of the Force. Star Wars® has inspiration in how we conduct our daily lives at work. War is conflict with people, which most would agree tends to surface at work too. How we deal with conflict in the office defines us as a manager and sets the company culture.

#### The dark side

From the Star Wars movies, Master Yoda described the dark side of the Force drawing power from fear, anger, and hatred, focusing inward. You do not have to lead by fear to get results. Some managers feel they need to hold power over their employees to achieve success. And, to gain that power, they resort to managing by fear. These managers also create conflict throughout the office by encouraging anger by example. They let their passion erupt in bursts as anger because they do not regard employees as having power. This management style also selfishly takes all the credit for their successes and deflects all the blame from poor results back to the employees. Any power given to employees is siphoned away. As a result, the company culture becomes dark, promoting anger between employees, hatred toward the managers, and an all-around stressful, unhealthy environment. To the managers of the dark side, though, they believe they are taking the necessary steps to guarantee success for the business.

Employees held captive by fear of losing their jobs will usually only yield short-term results. Eventually, they will find better opportunities elsewhere; most people do not quit their jobs, but quit their bosses (all the more reason to be a good boss). Mediocrity would be the best these ruthless managers can hope to employ since top performers and specific expertise would quickly leave. This is especially true in a healthy economy with low unemployment. In fact, the desire to be powerful in the office comes at a great cost because of the turnover costs involved. Training time and costs, as well as overcoming learning curve mistakes, all burden the business from reaching higher success. Ruthless mistreatment and disrespect may satisfy a power-hungry manager, but it will create more problems than it is worth since the business will eventually struggle to survive in the long run.

#### The light side

The Jedi Order in the Star Wars movies promoted the use of the light side of the Force, attributes of which include patience, teamwork, and compassion, through discipline. Treating your employee base with respect and compassion quickly leads to employing a team of people working together to achieve great results. Instead of sacrificing employees for personal gain, these managers sacrifice themselves for both their employee and business success. Conflict between employees and management becomes conflict rechanneled to overcome business challenges as they stand united. Then it is a matter of holding them to a high standard. This delivers power back to the employees through empowerment to achieve great things for the business as well as for their own careers.

Managers can take swift steps to strive toward achieving success without resorting to the dark side. You can still hold your employees to a high level of discipline by being rigorous to get to the results you envision. This might even mean making personnel changes as needed, right away.

Remember, employees crave guidance, but they do not want to have to walk on eggshells to get it. That guidance can be provided by incorporating a new company culture and best practices. The culture can be created where people have a strong opportunity to be heard and be truthful. So, managers do not have to resort to the dark side just because they want to create change for success. A rigorous approach binds the employees together and unites them as a team.

Be a good boss and do not lead by fear for the sake of your company's success. By organizing your human resources to align with the needs of the company, you can back away from micromanaging and become supportive of your employees. Hold them accountable, though, with exacting standards you set, where top performers are rewarded and underperformers are let go. Follow through with what you say you will do and show consistency. Your enlightened attitude and rigorous company culture will certainly get a response from your employees to perform at a higher level.

### Encourage Your Employees to Take Vacation

Be a good boss by encouraging your employees to use their vacation time. In America, vacation time taken is at a minimum. Counter your instincts; you need to encourage them to disconnect and take time off. Unless you are ok with high turnover, you will want to nurture your employees' performance.

#### Avoid burnout

Give your employees a break to avoid burnout. People need a break to relax, reenergize, recover, reset, and then re-engage. Otherwise, you will have a group of zombies working for you, where productivity tumbles. Burnt out employees find themselves in a rut and do not know how to get out of it. Job satisfaction turns disgruntled and your key people will end up jumping ship. As a manager, you have to maximize your employees' performance over the long haul. You cannot force short-term gains at the expense of long-term productivity. Instead, think of how best to nurture their performance. Invest in the time off to recharge their batteries. Employees returning from vacation come back fresh and ready to grab the bull by his horns.

#### Fresh perspective

Time off from work provides a fresh perspective because it is their opportunity to reflect on the bigger picture of their own lives. Employees are usually lost in the woods working paycheck to paycheck and do not really get the chance to see if they are satisfied with where they are in their lives. Vacations provide that time and that is usually when those satisfied with their jobs and careers will get the full benefit of the vacation time by relaxing. When it is time to come back, they return with a zest of refreshed energy ready to tackle their workload and, perhaps work their way to the next promotion.

#### Family time

Employees today demand a work/life balance as part of their daily lives. Paid time off is generally an involvement of quality time with family and is, therefore, vital to the wellbeing of your employees. And, for some, spending too much time with their families makes employees eager to come back to work. Most employees find delight in their time off and appreciate it for what it is -- special. These are moments cherished and remembered. Providing your employees this opportunity will be a return on investment in the long-run.

#### Loyalty and gratefulness

If your employees perceive that you want to take care of them, they will want to take care of you and your company in return. Among the top benefits candidates look for in an open position, they want to know how much paid time off is available. Remember, benefits help make working for your company desirable from the very beginning. You should follow through by allowing your employees to actually use it. Encourage them to use the time they have earned.

You can express this by openly communicating about the importance of planning ahead for time off requests. Nothing is worse than everyone trying to take the last week of the year off at the last minute. Announcing early to have everyone plan their vacations in advance actually shows you do not have a problem with them using the time they will have earned.

You should also assure your employees that their jobs are secure. Some actually fear that when they go on vacation, the company will find a way to cope without them. Or, changes may be made to some processes that go against the routine they established. Assure them that they will be welcome back when they return.

Similarly, you should take steps to help alleviate piled up work they will pay for when your employees return from vacation. Nothing kills a refreshed and energetic approach to work like a backlog of tasks to get buried under. Consider ways you can implement cross-training so that all of your employees can feel like their workload is temporarily covered while they are away. In Chapter 3-8, we will discuss ways to implement cross-training.

You should also allow your employees to take time off without them feeling like they have to work while on vacation. Try not to contact them unless the situation is critical, for which only they can address it. Some employees may have difficulty disconnecting during vacation, so it is up to you to encourage them not to work during their time off. You could even put a policy in place to support this notion for everyone.

Among the various ways to improve the treatment of your employees, encouraging them to take uninterrupted time off shows that you value them. Treat your employees well and they will treat you and your company well. The only way to grow it will be through the cooperative backing of your employees.

The irony is that those employees who do not feel well treated or do not like their jobs do not seem to have any difficulty using time off. You should also be aware that employees who do not feel appreciated tend to reflect on this more during time off.

### Employees Reevaluate Their Positions During the Holidays

'Tis the season for holiday cheer and the time people escape their routine and take in the big picture of their lives, career, and earnings. This break from minutia also comes just before the beginning of the new year. Employees start to review their place in the world and their role in your company. You will need to plan far enough ahead to counter employees rethinking their positions by increasing employee engagement and talking loyalty incentives.

Employees reevaluate their positions much more during the holidays because they are essentially encouraged to do so many times over. This is the time of year vacation time is used in conjunction with holidays. Time off allows employees a time of reflection. Holiday time off is usually spent with family, when careers are often discussed. And they are often discussed in overall terms regarding accomplishments and rewards. This retrospection brings up issues of job satisfaction and meeting long-term personal goals.

This is also the time of the approaching tax year end, where employees find out their worth to the penny. Some will pull their final paycheck stub prior to receiving a W-2 to see their total earnings for the year. How their annual salary compares to the market and to their own personal expectations determines how they will feel about their pay. If they feel undervalued with little opportunity for growth, then they may begin to think about moving on.

Another way employees are encouraged to reevaluate their positions is with benefit renewals, which typically take place at change of the year. It is another reminder to reexamine their earnings, value, and job satisfaction. This is because benefits require long-term planning for the next twelve months and they require employees to think about the big picture.

Lastly, holiday bonuses again remind employees about their worth and value to the company. Employees consider whether their bonuses are in line with expectations and reconciled with how much they feel they are worth.

Employees are encouraged to step out of their routine, to wake up as it were, and take a look at the bigger picture. They examine how much they are worth, what value they bring to the company, to their world. Perhaps a hidden passion previously set aside begins to itch, forcing your employee to address it. This is the time of year employees look at career options and long-term personal goals. They begin to ask the tough questions:

\- Is staying with your company going to meet my career goals?

\- Am I happy working where I am?

\- Are my individual passions being met?

\- Are there still opportunities for professional growth?

\- Is my compensation in line with the market for my position?

\- Do I feel appreciated?

The holiday season may not be the biggest time of the year for turnovers, but this is the time when feelings, thoughts, and considerations for moving on begins. Take steps much earlier to minimize turnover later.

There are a number of steps employers can take that can reduce turnover. Employers should attempt to make their employees feel appreciated through both compensation and non monetary agendas. The idea is to create loyalty from your staff. Some methods may take time to develop, but now is a good time to address these concerns and come up with these solutions.

By increasing your employee engagement, you are sure to create affinity with your staff. Teach managers to better engage their employees to improve communication, better understand and support their goals, and enhance the feeling of being a valued member of the team. But don't wait until just before the annual evaluations, or hope to achieve even with mid-year reviews alone. This needs to be done evenly throughout the year. More discussion on employee engagement is coming up in Chapter 3-3.

Another approach to improving employee loyalty is to update their responsibilities. Either through a promotion or an adjustment to their position in the company, it is a good to refocus efforts where the company needs them the most. Not only shifting their responsibilities, but discussing in detail what needs to be done and why the changes are needed. Your efforts should be to improve their footprint by providing the employees with a greater sense of purpose and impact to the company's success.

Changes to compensation is a go-to solution for raising allegiance, whether it is through a promotion and raise or by providing a bonus. Promotions and raises should tie directly to performance and get earned by your top employees. As suggested in Chapter 2-7, holiday bonuses, however, have the risk of enabling bad behavior. Often, these bonuses are given out to everyone, no matter how well they contributed to the company's success. At best, the amount varies by employee, but that is typically based on a subjective measure. Try to find a way to quantify performance measures so that you can justify the amounts each person gets.

Better yet, consider replacing the holiday bonus with profit sharing. Sharing profits through bonus payouts directly ties company success with individual performance. Those who drive more success share more in the profits. The benefits of offering profit sharing are aligning individual goals with the goals of the company, identifying top performers so you know who you would like to remain, and removing subjectivity from the equation so that true earnings are paid out.

While looking for ways to build employee loyalty, it is also important to dissuade so much focus at year end that encourages employees to reevaluate their positions. Take the pressure off the year end by planning events to fall at different times throughout the year. That way, you have a better chance at keeping your employees busy instead of pondering a career change.

Benefit renewals, for example, tend to get scheduled right at the change of the year, but these meetings can take place at a different time, such as offset a little from the beginning of the new year. Once employees are hard at work following the first of the year, it would minimize the distraction by only having to establish these long-term plans after the year has already begun.  
Profit sharing paid out quarterly is a great example how you can lighten the weight of the year end and divert your employees from reassessing their work situation. The other problem with holiday bonuses is the timing, right at the end of the year when employees are carefully scrutinizing their compensation. Quarterly profit sharing removes "holiday" from earned bonuses and staggers them throughout the year.

Vacation time should also be planned out better in advance, as we have just discussed. Many businesses do not encourage employees to take earned paid time off, but probably should. Employees will be more likely to take time off more evenly in the year if they are encouraged to use it earlier. Instead, most people end up with time to burn at the year end, leaving a skeleton crew during the holiday season. As a consequence, you establish both better communication for everyone regarding attendance and you get happier employees, both for those who can use all their time off they earned and for those left covering at the office. A little effort in planning ahead may make a difference from your employees contemplating their future beyond your company.

Any investments in new office furniture or new features to the break room should probably be done at other times of the year as well. Nothing is more obvious than a desperate attempt to appease unhappy employees than by scrambling with new purchases right at the year end.

Company events can still be held during the holiday season as long as they also occur at least one other time in the year. Further, it is better perceived if the plans for the event are made far in advance and it has been added to everyone's calendars early.

Employees who come to expect good things throughout the year are less likely to put too much focus on the end of the year and keep with their routines. That is the time of year that typically carry too many opportunities for reconsidering their positions at your company. They may not jump ship at the year end, but this is when the dissension begins. Do what you can now to keep your valued employees later.

As long as you treat your employees well, this scenario is probably nothing you would need to worry about. Spreading events to take place throughout the year is merely chasing away the symptoms of a much bigger issue. Instead, you should want to focus your attention on how engaging those employees can turn them into a happy, devoted resource for your company. To start, let's look at recognition and rewards and how they can help with employee engagement and motivation.

## 3-2 Recognition

Give recognition where it is deserved; just make sure the determination of deserving recognition is preset and equal for all employees. Recognition is the honoring of employees who have made considerable contributions. Employees respond well to recognition because it provides positive reinforcement for their work. Employees that affirm their role in your company with purpose will especially find motivation by receiving an award in the eyes of their peers. Recognition can receive a similar response to a raise. This is your opportunity to make a show of it.

### Why Are Award Shows So Popular?

In the grandest of events, famous actors in gorgeous gowns and smashing tuxedos make their way past the red carpet to take part in a Hollywood presentation of recognition with their peers. Awards are given out to those who succeed in their profession.

Anyone working hard and succeeding in their trade, including your employees, should be recognized. Remember, your employees' success is your success. Such recognition does not have to be a red carpet event, but acknowledgement is important to help bring purpose behind all the effort put in during the year. Your employees need to hear it from you that you appreciate their hard work by highlighting particular successes. They deserve it. Similarly, you watch your favorite actors get recognized for their efforts in front of the camera. Because you feel they deserve the awards, you find yourself rooting for them to win.

Recognition should be backed with an award of some sort. But, that could become expensive if you are resorting to cash or gift card rewards. Be creative and think of other ways you can show appreciation. There are numerous ways to award an employee without giving them cash[25]. Below are just a few examples:

1) **Email announcements:** be sure to send out an announcement to the company that you are recognizing employees for their dedication and accomplishments.

2) **Offer flex time:** depending on the policy you have already, you may want to extend flex time to your recognized employees for a day or week.

3) **Lunch:** show appreciation one-on-one by going to lunch together. Another option is to throw a pizza party for the entire company in the name of those recognized.

4) **Swap desks:** an out-of-the-box solution could be to swap work environments with the boss for a day. Each employee would continue to work on their own workload, but from a different perspective.

5) **Reserved parking:** allow premium parking in front of the office for your recognized staff. This is a typical token for employee-of-the-week or month, so it is up to you on how you might want to structure this incentive.

6) **Casual dress:** again, depending on your dress code policy, you may want to extend certain allowances for your recognized employees for a short time.

7) **Day off:** adding an additional day of paid time off will always be well-received. You can also provide a half day incentive for varying degrees of accomplishment.

8) **Car wash:** another unique approach is to have your recognized employees' cars washed and detailed, while they are at work.

9) **First pick of a project:** allow your recognized employees to have first dibs on available projects and assignments.

10) **You do it:** allow your employee to dump a task or project onto the boss to complete. Make it reasonable, of course. This only costs you a little of your time.

11) **YouTube:** for those really exceptional efforts you would like to recognize, post a thank you video of you describing the contributions.

12) **Points:** if you can institute a point system in your office, you can assign them to your managers to hand out. These points could be saved up or used to redeem various prizes you have made available beforehand. Perhaps you can utilize a number of items from this list to use as rewards. This way, you can be sure to provide a more meaningful reward with which to recognize your employees.

Many ideas like these and many more are abundant online. Simply search for "recognition without paying cash". Most of the items in this list above do not have any direct costs whatsoever, but will provide your employee with significant recognition for their success. Likewise, you should see an added spark of motivation, not only from the employee being awarded, but by others who witness it. Whichever reward you offer, make a show of it. Just be careful not to rely too heavily on these too often.

Be careful you are not overdoing it by making the standard of achievement too easy to receive recognition. Raise the bar somewhat and make your employees earn it. If we place too much value in the earning of awards, you may be missing the purpose and the inherent competition in the game. It is no longer an incentive if everyone gets them. There is clearly a balance that you must find in order to make recognition and rewards effective in your business.

Being a good boss and recognizing your top performers is just the beginning to opening your company up to growth potential. You will need to turn your attention to your employees by putting value on them. Your focus should remain on your employees because it is through their success and personal growth that your company will grow as a result. The prerequisites are out of the way, so let's deep dive into efforts to make better employees, starting with employee engagement.

## 3-3 Employee Engagement

Engaging your employees is a challenge because it is an investment in time and, frankly, many small business owners are unsure how to do it. Like everything else we talked about, engagement, too, is an investment in your human resources. It is easy to say more engagement and collaboration is needed, but most people are not sure how to begin.

### Ok, So I Have to Engage My Employees, But How?

What gets your employees up in the morning and fight traffic just to come in to work for you? Is it just a paycheck to them, or something greater? Deep down, just about everyone wants to feel value for their work, giving them meaning and importance in their lives. You need to tap into this in order to get your staff motivated to achieve greatness for your company. For some, motivation comes easy; for others, it is a behavioral change and it will take some time. Motivation first requires job satisfaction, then add a sense of purpose and a little inspiration. So where do I start? Below are some specific tips that can get you started.

1) **Ask questions and listen:** conduct everyday conversations with your employees. For example: "how are you feeling about this project/that request?"; "is this the kind of work you enjoy?"; "do you feel like you are able to get a lot done?"; "what else in on your plate for today?". Be sure to give positive feedback whenever you can during the conversation. For example: "great work on completing that project"; "taking that path was a wise decision"; "good approach to the workload". Conversely, gently give constructive feedback. For example: "instead of this, try doing that"; "in my experience, it would be better to have done it this way"; "live and learn; next time will be easier".

2) **Engage your employees:** ask periodically how your employees feel about their jobs. Inquiring about what your employees like most and like least can help you gauge their role, their approach to their role, and provide a clue toward their performance. Asking them if they have a good work/life balance can tell you if they feel overworked, which may tell you about their time-management skills, and paints a picture of the level of performance they are willing to bring. Follow up with questions about what you can do to make things better for them as a facilitator. That shows you care and they may have some ideas that can work on to build their loyalty. Encourage your department managers to follow suit with their direct reports.

3) **Review objectives:** become familiar once again with your employees' objectives by meeting with your employees individually at least once a quarter. Discuss how well your employees think they are progressing toward achieving their goals - discuss each objective at a time, but take no more than 15 minutes in total.

4) **Share objectives:** ask your employees to share their objectives with their peers at the same level. Make them commit to their objectives by announcing what they aim to accomplish. Sharing your goals with others has been proven to strengthen one's commitment to accomplishing them.

5) **Be open to questions:** encourage your employees to see you whenever they have questions. Reiterate the open-door policy and what that really means. When they approach you, try to drop what you are working on and give your employees your full attention. If it is a relatively simple hands-on solution, get up and help them knock it out right away. Usually it involves engaging someone else; so you, as the facilitator, can be helpful at interacting first with that third person and "set up" an ad-hoc meeting.

6) **Go and see your employees:** get out of your chair and go to your employees and engage them directly. If there is nothing important to discuss, open the floor to idle chatting as a passing. Make your presence known and be obvious with your attempt to "get to know" your employees more.

7) **Show interest:** show genuine interest in the employee as a person outside of work (family, hobbies, life, etc.). Take mental or even written notes following each interaction to review again later. Surprise them later with questions about their personal lives to show you do listen and actually care.

8) **Company-wide:** provide town hall meetings every 2 to 3 months. These should be packed with updates relating to the company's performance as a whole, financial information, operational changes, etc. Consider transparency when sharing information with your trusted employees. Confidentiality should extend to the four walls, not just your desk. This level of engagement is to reinforce buy-in as employees realize they have a direct impact on the success of the company.

9) **Sponsor events:** provide company-wide fun events at least twice a year. Employees resonate strongly with activities that encourage employee bonding. They spend most of their days with these other people at the office, so it is beneficial to sometimes shake off work-related issues for fun-filled activities.

10) **Welcome everybody:** invite all employees to brainstorming sessions. Do not limit the session size to only those in that department. Inviting all employees to voluntarily share will allow for ideas from an outside perspective to arise. Additionally, it is another way to engage your employees and add value to their contributions.

11) **Presentations of duties:** if time permits, require employees to individually conduct presentations to the whole company on what each of them does for the company. It could be done by a single employee per week, or as often as you can spare to have group meetings. This is a great way for employees to take ownership of their desks. It is engaging for everyone, and it provides clues to how well the employee understands their role, relationships and handoffs, and their importance in the company. Additionally, it allows outside perspectives to suggest better ways of completing specific tasks by posing questions.

12) **Require cross-training for backups:** it is sound advice to have backups for every role in the company to reduce the impact of sudden departures. Make sure everyone has an understanding by practicing it as vacations are taken. More on this in Chapter 3-8.

13) **Learn how to mentor:** require managers to study and learn how to mentor. Training managers how to better engage their employees is important. Employee engagement has to be initiated from the top down. It is up to you to continuously engage your employees and encourage department managers to do the same.

These steps outline how you can go about engaging your employees. As you do, think about how you may be able to gear this level of collaboration into educational/training or coaching sessions. The purpose of getting in front of your employees is to motivate them. While attempting to do so, you need to make sure your message is being received.

### How Can I Get Through To My Employees?

Setting policies, conducting training, and making announcements may not be enough for your employees to hear you. You can send out memos and email reminders, but that is only good for employees who take the time to read them. There are a few steps you can take to ensure all of your employees take in your message.

The best way to get acknowledgement from your employees is the earn their buy-in. The concept of buy-in is having them side and support the intended change. It is important that your employees actually understand that their contributions impact the company and that they should take steps to promote your message. That is the ultimate goal for any manager. But how do you get there?

First, you need to set the example for everyone. As a manager, you need to "walk the talk." If you are not behind your own idea, you cannot expect others to follow. Instead, it is up to you to promote a particular perception throughout. Look at your role as a mentor. Push the idea by getting excited about your message, motivate your employees to embrace the idea, and run with it. Be present and supportive to everyone. Next, you need to in the position to facilitate your employees. This means you need to be ready to provide the tools they need to act on your message. Remember, you need to follow up with reminders and examples. Finally, find ways to communicate how this impacts the employees individually. This will help promote your message and step toward buy-in.

The content of the message is vital to the success of your employees' acceptance. Keep it simple. This means to build a message that can be communicated to a twelve-year-old. Leave out the corporate buzzwords, limit the complexity, and keep it at just a few steps. The Rule of 3 focuses on the optimal number of bullet points for people to remember. The first, last, and one other point people can repeat as a takeaway is best. After releasing your message, you immediately need to check for understanding. Get the employees to rephrase and restate each point back to you. This can be done by asking what they heard, asking for how they feel about the idea, or asking for their thoughts on how best to achieve the action points to roll them out. Don't just assume they received the message; you have to make sure it registers.

Reaching your employees takes effort. Be ready to listen to them before, during, and after you deliver your message. Show your respect for them; their perception will determine how well they understand and retain what you are communicating. Be genuinely interested it what feedback your employees return. Feedback shows they are responding to your message and are thinking about how to implement it. A lack of feedback may be proof that your message is not being received as you intended.

There are creative ways to communicate that may help catch the attention of your employees and peak their interests, all of them harnessing positive reinforcement. Consider putting on a town hall, an event that allows you to present new changes, illustrate successes and downfalls, and put on prizes and to engage the audience. Whether here or in a less formal setting, you could should make use of pics and vids. It is easier than ever to capture these into your presentation. Get ready; not everyone enjoys presentations. Since they can tend to be a little dry, the burden falls to you to mix in some humor and irony. Tell interesting stories that relate back to your points. If presentations are still not doing it for you, have a contest. You can structure the contest to offer rewards for meeting certain thresholds or conducting certain tasks that will achieve what you want to accomplish. Similarly, you could hold an employee appreciation event tied to the success of the policy change. Many appreciate being recognized for promoting your message and this may be the way to do it. Not only are you revisiting your message, but you are promoting buy-in by setting this example. Hopefully, others will follow. Regardless of the creative method you choose, positive reinforcement is the best way for your message to be accepted.

Get your message heard. Remember, representation starts with you. Deliver your message, but keep it simple. Afterward, fish for feedback. Finally, find creative ways and positive reinforcement to promote that message by peaking the interest of your audience and earning that buy-in.

Buy-in is an essential component of employee engagement as one way to inspire motivation. We are looking at ways to turn your employees into champions so you can rely on them to help build a growing company together. Motivation is at the core of this transition because your employees will feel rewarded and satisfied for their efforts. You want to develop job satisfaction in the workplace, which requires motivation, because employee engagement will not be successful if your employees are not satisfied with their jobs.

## 3-4 Motivation

There are many ways to motivate your staff, which can be divided into two categories: intrinsic and extrinsic motivation. Building intrinsic motivation in the workplace takes time because it requires a change of behavior of your employees. You want them to perform better, and they will want to, too, because it is personally rewarding to do so. This type of motivation generates much longer returns because it generates true job satisfaction in your company. Your employees need to feel a legitimate connection to their responsibilities and even to their passions while at work. Contrarily, extrinsic motivation is the type of on-the-surface, quick-reward catalyst for doing a good job for you, not necessarily for themselves. Both can be useful in the workplace, but you will need to apply them carefully.

Too much of a good thing may be bad. This counterintuitive thinking can be applied to motivation as well, like when you offer excessive external rewards for something that is already intrinsically rewarding. "In one study, for example, children who were rewarded for playing with a toy they had already expressed interest in playing with became less interested in the item after being externally rewarded[26]." It turns out that you could run into what is called an overjustification effect.

The subject of motivation is important to developing employees that will drive company growth. Before digging into ways to align passions with work for intrinsic motivation, which requires a behavioral shift, we need to explore ways to apply extrinsic motivation.

### Extrinsic Motivation Methods

The more common ways to reinforce performance to motivate your employees is using extrinsic motivation. A more direct and easy approach can yield short-term results in getting your staff moving to complete a project or important task. You will often use extrinsic motivation in situations in which tedious tasks are required.

#### Financial rewards

Offering more money will usually generate motivation, in the form of raises through pay-for-performance in Section 2, profit sharing bonuses, or spot bonuses. This go-to reward option provides the positive reinforcement employees want, but it is usually not a long-term solution.

#### Punishment

Negative reinforcement also works as an extrinsic motivator, even in the workplace. Employees are compelled to improve job security even by doing work that does not align with their interests. The Performance Improvement Plan in Chapter 2-6 is an extreme example of getting your employees to make large strides toward better performance.

#### Recognition

Recognition is hugely important to show your appreciation, which can be done in many ways. Details on recognition are found in Chapter 3-2. However, you do not have to wait for formal recognition of an individual before taking steps to improve the atmosphere at work and the employee relationships.

1) **Show appreciation:** there are many ways you can appreciate your employees without spending any money. Be creative by thinking of ways to make their work life a little easier and little more special so they continue to stand out. You should want to partake in some creative ways to show appreciation after your employees positioned themselves to drive your company forward. Show them they are headed in the right direction. General appreciation should be delivered to the entire office.

2) **Reward for self-improvement:** identify and reward those that embody and excel at taking ownership of their workloads, taking the lead, and managing and/or training others. Similar to appreciation, there are many ways to reward without spending money. The difference is that rewards should be presented to targeted individuals instead of the entire team.

3) **Provide feedback frequently:** throughout the process of promoting and encouraging empowerment, frequent feedback is not only welcome, but it is critical to the success of this progression. Praise for good behavior and make adjustments when falling short. Feedback shows that you support your employees and that you are with them every step of the way. It also shows encouragement for them to step up further and take on more responsibilities. Try to set up regularly scheduled meetings in small groups. One-on-one meetings can also be held as needed. Discuss how well your employees are coping with the changes and what you can do to facilitate. Be available to answer questions that can help guide them, such as how to manage others, expectations in training, and further development needs.

#### Peer pressure

Comparative metrics can inspire friendly competition toward higher productivity and/or better quality output. Consider tracking metrics and sending out periodic ranking results to all parties involved. You may find an overall increase in performance through this extrinsic motivation.

These methods are widely used already because they are useful motivators. However, extrinsic motivation tends to yield marginal increases in performance and/or may provide short-term gains. They can be used in conjunction with intrinsic motivation, but, again, be careful to identify when intrinsic motivation already exists so you do not arrive at overjustification. There are many intrinsic motivation methods, all of which drive genuine job satisfaction. They all aim to change behavior and connect to the interests and passions of your employees.

### Intrinsic Motivation Methods

Job satisfaction is not only critical to reduce turnover and drive better quality output, but happy employees are the ones that will help grow your company. Try to apply more of these motivation methods to strengthen job satisfaction: respect, working conditions, degree of tolerance, purpose-driven responsibilities, inspiration, and empowerment.

#### Respect

Respect for your employees is demonstrated by your actions that reveal how much you appreciate them. Face it, you need them; so, why not show them? Treat your employees with respect and they will treat you and your company well. This is why you need to be a good boss.

#### Working conditions

As far as working conditions go, you know when things are good and when they are grueling.

1) **Enhance working conditions:** take action to make repairs and dress up the office in new ways to bring in new light. This may seem superfluous, but little things go a long way toward job satisfaction. Add fringe benefits, such as free coffee, an ice maker, filtered water, subsidized life insurance and/or disability insurance, fitness center access, etc. Many of these are actually inexpensive, but go a long way with the employees. Any additional fringe benefits you add directly add to the level of job satisfaction.

2) **Maintain consistency:** through good times and bad, it is important to maintain policies and keep promises. Consistently uphold your core values religiously, even when it is inconvenient or at times of hardship. Upholding the policies and eliminating exceptions will allow for solid expectations to form and for dignity to flourish. All else the same, employees will find honor in consistency, even if do not fully agree with the policies.

3) **Free up time:** anytime you can give time back to your employees will be received with gratitude. Try to avoid tight deadlines and try to end meetings early. Place a little less scrutiny over personal time. Occasionally dismiss people early. Offer flex time if it makes sense in your office. Encourage socialization at work. Interestingly, most social conversations at work circle back to work-related topics anyway. Finally, organize the office to be more organized, stress-free, and efficient.[27]

#### Degree of tolerance

The level of openness and approachability ranges between walking on eggshells and an open door policy inviting knowledge of the dirty truths about your business. Of course, this knowledge would give you a more precise target to attack. Inviting a rigorous culture to your business will put your employees on track to find the job satisfaction they need to become motivated. We talked about how, instead of having to worry about job security, your remaining employees would focus on the issues at hand and would be in a better position to find success.

#### Sense of purpose

Providing your employees with a sense of purpose is an even more potent way to drive job satisfaction. People strive toward a belonging that welcomes their contributions. In general, your employees want to know the work they are doing creates added value to the company, that they have an impact by leaving their footprint in the company. Efforts to provide purpose to your employees, in turn, reflects their value on the company. That is how employees become inspired to take ownership of processes, develop ideas for improvements, and make enhancements that drive increased production. Moreover, if you can squarely match their workloads to what they are passionate doing, then you will have profound source of loyalty and motivation. As long as you put in the effort to provide purpose for your employees, they will continue to reward the company with better performance and quality production. By solidifying this value-added sense of purpose for your employees, you are close to reaching genuine motivation within them.

#### Inspiration

Inspire them. Make the effort to get people onboard and excited about your accomplishing something great. This starts with you. Paint a picture of your vision for success in the minds of your employees so that everyone can appreciate the target goal. If you are excited about approaching a vision, then your employees will correspondingly get excited as well. Share results along the way so everyone can celebrate the progress. Challenge your employees to do their best and call out those who take shortcuts or rush through their work. Throughout, play the role of a coach or mentor and encourage people to keep growing. Take care of them. "People will rarely remember what you did, but they will always remember how you made them feel."[28]

#### Company culture

Create the type of workplace where people come to you with resumes because it has become a great place to work. Culture goes beyond good working conditions and fringe benefits; this embodiment is a mantra to live and work by, whether written as a mission statement, spoken, or merely understood. Corporate culture describes and governs the ways a company's owners and employees think, feel, and act.[29] Promote your culture as much as you can to your team and always stay consistent. We talked about introducing a rigorous company culture where people have a strong opportunity to be heard and truthful, to tackle issues and improve processes, and develop best practices. This mindset change gets those on board to align what makes them tick with the challenges before them. Changes like this company culture intrinsically motivate your employees to perform. We will revisit company culture in greater detail in Chapter 3-10.

#### Empower Your Employees

You can show you value your employees by empowering them. Empowerment is turning over certain responsibilities to your employees and trust they will be able to successfully complete the work without having their hands held the whole time. If you can accurately align workload with your employees' passions, empowerment will achieve a big boost to job satisfaction. This gets explained in a whole lot more detail in the next chapter.

Basically, employee empowerment requires a behavioral change to be successfully implemented, which you can impart by demonstrating the value of your employees. No longer will their jobs be an exchange of services for a paycheck; they will be intrinsically motivated. Happier, needed employees work primarily because they have taken ownership of their work, found citizenship, set expectations of themselves, and established responsibilities to do what's best for the company. Empowerment provides for controlled growth -- relinquishing the foregoing micromanagement style does not surrender control of the company; it opens the door for your company to flourish. Once put into action, empowerment is the conclusive proof of whether you have been able to reach individual's connection to his or her passion. Employee value should shine if they have been stimulated through the improvements to workload ownership and responsibilities.

Intrinsic or extrinsic motivation both bring results to employee performance. Instead of relying on short-term extrinsic motivators, which are already widely used, our discussion focuses more on intrinsic motivation that drive real job satisfaction, which is fundamental to keeping your employees engaged in their work. Motivating your staff takes effort; but, it is in your best interest to get them all excited about their work for themselves and for your company. If you want to achieve effective employee engagement, you will also need to consider how to bring job satisfaction to your employees. Motivation is a behavioral change that must come from within, but can be drawn out through the right approach.

As the facilitator, get the fundamentals in place by providing the opportunities for your employees to boost their levels of job satisfaction. Any way you can strengthen the connection between the employees' workloads and what they are passionate in will drive motivation. You could resort to extrinsic motivation methods, but instead, it is more important to boost job satisfaction the would have a more meaningful impact on your employees and motivate them to perform at a higher level.

## 3-5 Empowerment

The only way your company can grow is by enabling your employees to step up and become leaders. By empowering your employees, you are strengthening your company's resolve and opening it up to organic growth opportunities. This begins with you because you need to let go of some of the workload and trust in your employees. While working through that internal mindset shift, you can begin preparing your employees to take on additional responsibilities. These strategic steps will reposition your employees to maximize your human resources potential.

### How Do I Empower My Employees?

Empowerment is giving your employees the authority to take care of what needs to be done without micromanaging. By empowering your employees, you can strategically reorganize the company to scale up through controlled organic growth. Basically, you are building a team that truly represents your company. The only way to achieve a true breakthrough to great success involves everyone working together as one. The first step to achieving this is to trust your employees. If you cannot trust your employees, perhaps it is time to reevaluate who should be driving your business forward. Stop micromanaging and start listening and providing guidance. Become transparent by sharing progress and financial data with your team so that the company goals are clear. The next step is to value your employees through intrinsic motivation by improving job satisfaction and signifying genuine need for your employees. Invest in your employees and aim to make it a place they would never want to leave. Then, you would be ready to delegate authority and provide real opportunities that will have an impact on the company. Finally, provide feedback and show appreciation for self-improvement.

#### Trust

Empower your staff by leveraging department managers and put an end to micromanaging. Treat your employees as professionals and trust they will do what is needed to complete the job with quality performance. People love to be trusted. They are more likely to be self-recognized as an integral part of the company and valued member. Trust is not earned easily, and it goes both ways. Once lost, it is difficult to regain. However, it is worth the effort because trust builds confidence in your team of employees. You will know they all fight for the same company goals and you can count on them to manage tasks so you can focus on growing the business.

#### Step-by-step: building trust

1) **Set the example:** demonstrate trustworthy behavior. Your employees view how well you keep promises and how well you treat customers and other employees. Stop being disingenuous and start acting like a model citizen in your office.

2) **Promote open communication:** demonstrate and encourage open discussion regarding business decisions so you can begin to establish buy-in. Clear the air and no longer discourage opinions, brainstorming ideas, or anything else your employees can provide. You can start by being available to everyone. Share your cell phone number with your staff. Begin to ask for their opinions on important topics. Incentivize your staff to work together by assigning projects and shared workloads.

3) **Provide amnesty:** allow employees to feel safe to report failures. Walking on eggshells and hiding errors as we discussed earlier is not helping anyone nor the company. The sooner you can face the truth about bad news, the quicker it can be resolved. Seek all the information you can on employees' failures and thank them for being forthcoming.

4) **Stop lecturing:** if you continue with rants and lectures, you will soon realize that lecturing and telling your employees what to do implies that you do not have faith in their decision-making abilities. Get down off of your soapbox. Otherwise, they will become defensive and they can lose faith in their own confidence to make decisions.

5) **Listen to learn:** your employees will likely gain more detailed knowledge about your business than you will ever know. Listen to what they have to say and gradually go with their decisions. Refrain from evaluating them or interrupting. Instead of telling them how to do their jobs, ask questions to provide guidance and lead them to discovering their own conclusions.

6) **Delegate more:** when you hold onto tasks and don't delegate, you deprive your employees of an opportunity to advance their skills[30]. Start with small tasks and slowly build up to big projects. Focus on the intended results, not about how your team of employees goes about completing each project. Give yourself a break; trust your team members more; and realize that you can actually achieve more by doing less yourself[31]. Then you can return to doing the things you enjoy working on.

7) **Be transparent:** share the company performance metrics from operations, sales, and other areas, as well as the financial status with your employees. Everyone is in the same boat, so share the condition of the boat to everyone on board. Full disclosure of the company's performance will establish both loyalty and trust.

Inherent value affects your employees' feelings about their job and their place in the company. Everyone wants to feel important, so empowerment impacts their feelings of self-worth and self-confidence.

#### Real responsibilities

As you know by now, most employees want the opportunity to leave their footprint and know that they have an impact on the company's success. Their efforts can actually change the shape and outcome of the company. That powerful realization empowers them to step up and make the hard decisions. With a promotion comes increased responsibilities. This type of delegation needs to be based in granting authority with opportunities to impact the company's success. Beyond the perception of taking ownership, you are now handing over the keys to some important functions of your business. It is critical that the roles are clearly defined and everyone understands their new job requirements. You simply need to monitor performance and hold your employees accountable.

#### Step-by-step: delegating real responsibilities

1) **Promote your top talent:** these are your experts, so you should want them to oversee teams and/or developments, provide feedback, and even some training. Ease them into these types of lead positions, then consider promoting them to department manager positions. The biggest difference here, of course, is managing people, which involves soft skills. You may need to evaluate their soft skills before reaching manager-level positions. Be sure to evaluate the level of soft skills your employees have before placing them in management positions. Although they are categorically the same type of people with similar experiences and interests, you should evaluate their managerial abilities. It would be wise to establish varying promotional levels that ultimately reach the department manager role.

2) **Delegate real authority:** you have to be able to give up some control of your business if you really want it to grow. Unfortunately, you cannot run everything yourself; you need your best people behind the wheel. Give them the power they need by granting them the authority to make things happen. Open up access rights to sensitive information. Allow them to make decisions without your involvement. Allow them to manage their own staff their way. Let go of the little things and focus on the business as a whole by working on the things you are good at doing.

3) **Clearly define the roles:** set the stage so everyone knows what their responsibilities are and their level of authority. This eliminates misunderstandings and brings a level of comfort to the employees. It helps to document these in the job descriptions for each role. Share these job descriptions with the employees and hold meetings to discuss the handoff expectations and who reports to whom.

4) **Require accountability:** part of taking ownership of duties means being responsible for mistakes. Make sure to acknowledge when mistakes have been identified and dealt with timely by the employees. Hiding the truth or letting issues fester should follow with harsh consequences, such taking privileges away, reducing access and responsibilities, or even demotion, if necessary.

By empowering your employees, you are strengthening your company's resolve and opening it up to organic growth opportunities. These strategic steps will reposition your employees to maximize your human resources potential. It will take some work and it is an investment in time. You will need to trust your employees to make the right decisions. It will take work to improve their job satisfaction and demonstrate their value to the company. After prepping them, the time will come when you will promote your top employees and delegate real responsibilities. Finally, you will need to provide reassurance and suitable feedback to make it all stick. This investment in time and effort will pay off many times over as you surpass the growth threshold of the past and scale up.

### Communication is Everything

Without sufficient communication and understanding, everyone will be operating oon their own island. People make assumptions and jump to conclusions. As a leader, you need to eliminate that from happening and get everyone working on the same page. This takes effort because it will likely take some planning and action. It starts with addressing everyone at a town hall or company meeting. Sharing ideas and communication should be omnidirectional. Encourage communication throughout your office, as long as it is professional and relating to business-as-usual. Get your managers to increase face time and engage with their direct reports. Respect and honor your employees to build an atmosphere of openness. And, encourage all of your employees to participate in developing ideas for the future. Encouraging communication between one another is the secret sauce allowing you to maximize your human resources.

#### Encourage communication in your office

Communication begins with addressing everyone at a company meeting. This is your opportunity as a leader to bind together your team. Clarify how important it is that everyone understands they are all working for the same overall goal. Announce open-door policies for the management team and invite everyone to approach their managers with questions, ideas, or discussions. Explain why communication is important to everyone, that it leads to understanding and better comradery. This bonding through branding is better for the company and also better for the employees. Attempt to align company goals and talk about company culture with regard to open communication. This is a step closer to transitioning from encouraging communication toward drawing out innocent missteps so that you can get to the brutal, honest truths. Remember, you want to know the areas of your business where improvements are needed. Your employees can help point these out quickly and open issues can be resolved together.

#### Keep internal communication professional

Sometimes allowing open communication can be something your employee take advantage of. This is not about time spent at the watercooler or in the breakroom. In fact, those conversations usually find their way back to business-related topics anyway because that is something your employees all have in common. Sometimes, the message of open communication can be misconstrued as the freedom to exhibit unbecoming behaviors. Keep professionalism in check and swiftly punish those who get out of hand. Otherwise, festering resentment builds over time, which can only be unproductive. Employees begin pointing fingers at each other instead of helping out and they find themselves divided instead of standing together as a team. Then they attempt to shift the blame to others, even customers, absolving themselves somehow. Unfortunately, lost efforts here do nothing to resolve the true nature of the issue. If it persists, you may find name-calling and bullying in your office like it was back in grade school. You have got to nip this in the bud early.

Include with your message the importance of professionalism right from the start. Explain that one's behavior has a direct impact on all others in your office and on the customers. Just as important as encouraging open communication throughout your office, you should define what it means to be an upstanding employee. Consider introducing a code of conduct if you still do not have one in place. You want your employees to have strong citizenship with one another. Everyone wants to be treated like adults, but sometimes their behaviors say otherwise. Give recognition to those who have a consistent track record of professional behavior and punish those who were caught being inappropriate.

#### Encourage managerial participation

Get your managers to participate more with employee performance. They are your gateway to optimal productivity and increased job satisfaction in your company. To start, train them to assist your employees to develop meaningful objectives (Chapter 2-2). Then, schedule multiple evaluations during the year (Chapters 2-3 and 2-4). This encourages managers to communicate clearly with the employees and make sure they are on track to succeed. Additionally, managers need to be taught to be guides, teachers, and even coaches. They should be encouraged to hold training sessions and on-the-job training. As coaches, managers should schedule regular meetings with their staff to prioritize workload. These meetings replace micromanaging, keep a finger on the pulse by following up on progress reports, and open discussion to the best approach to accomplishing priorities. To further encourage managerial participation, you could advertise an open-door policy. Perhaps you can include open communication as part of the company culture.

Managers should attempt to get ideas from their employees. Put them in charge of innovation contests, or rewards for project completion or productivity. They could organize brainstorming sessions, open to all employees, hold cross-department meetings with the intent to find workflow efficiencies, and set up training sessions on shared common responses to customers' frequently asked questions, for which all of your employees should have the same answer. Getting managers involved with their employees will increase job satisfaction and overall productivity in your company.

The best way to communicate that your employees are part of a team with a shared focus is to invite them to share ideas that will help the company move forward. Whether it is for a project, the launch of a new division of the company, or a bid to win a major customer, your employees are the best resource from which to extract ideas. They know the company's needs and industry standards better than anyone else. More importantly, employees want to be part of the greater good. Engage them and pick their brains in a number of ways. Start with voluntary brainstorming sessions that invites all of your employees to participate. Offering rewards not only helps with participation, but also adds popularity to the topic, where everyone in the office would be discussing it. If there can be the clear winner, consider sharing a commission or fringe benefit.

#### Respect your employees

If you respect your employees, they will respect you. However, it is up to you, as the leader, to take the first steps. Here are few things you can do to show signs of respect for your employees:

\- Stop micromanaging

\- Talk to them more often

\- Allow more vested time off

\- Promote within to fill lead roles

\- Create Department Manager positions

\- Delegate more

\- Stop the time clock punches for office professionals

\- Discuss employee innovations

\- Allow employees to suggest best practices

\- Loosen up on the internet-usage policies

\- Encourage employees to "take ownership"

\- Assign champions to projects and campaigns

\- Allow working from home

\- Consider ending the time-off tracking

The items in this list all have the same theme in common: ease off the stronghold you have over your employees and treat them as team members that represent your company. This may take time, but as you progress through many of the concepts we discussed already, you should be able to follow many of these items above.

#### When does guidance turn into micromanaging?

It is hard to let go sometimes. Even after you feel like that trust in your employees is sound, you may be unintentionally micromanaging. It is all about perception to the employees, so you may want to ask them or, at least, pay attention to feedback. Below is a list of indicators of micromanaging, from their point of view.

Your manager might be a micromanager if:

\- you see your manager more times than you see your spouse

\- your manager spends more time in your office than in his own

\- your work is always returned with edits or corrections

\- you never feel worth your value

\- you have to constantly think before you speak

\- your ideas suddenly become your manager's ideas

\- instead of teaching you, he just completes it while you observe

\- you feel like you have a monkey on your back

\- he notes the time you arrive and leave

\- he clocks you out for potty breaks

\- he takes all the credit and shifts all the blame

\- he attends every meeting you are in

\- he gives you daily assignments

\- praise is a rare gem, while wading through all of the anguish

\- you feel like you have to sneak around the office

\- you are tempted to leave your manager hanging

\- you dream of ways to gain the upper hand

\- you want to quit, but you're too dependent

\- coworkers are surprised to see you alone

\- you even sit next to your manager at happy hour

\- your manager speaks for you

Some of these may be exaggerated, but the point has to be made. Granted, there are some that need to be given directions, which may not be a bad thing depending on your industry and the roles they play. However, for most front-office employees, it is stifling to employees who are micromanaged. It is counterproductive and it spends a lot of your time going in the wrong direction. If you feel like you have an employee that needs that much guidance and attention, you may need to consider cutting ties and moving on. As for your top performers, you should take special care to keep them. They are an integral component of experiencing growth in your company.

### Top Reasons Why Good Employees Leave

Keep your good employees by offering them what they want. It is astonishing that small business owners and managers simply do not know how to ask. They make assumptions and then left shocked when their top performers resign. Engage your employees now. Communicate. Get to know their needs and work to align them with the company's needs. Remember, the answer is not always more money.

#### Employees want more than a higher salary

The top reasons your top employees leave is not just because of a better salary, but because they have better opportunities that align with their interests. Eighty-eight percent of voluntary turnovers, something besides money is the root cause[32]. This astounding disconnect between belief and reality allows managers to deny responsibility for correcting and preventing the root causes of employee disengagement. They want recognition, guidance, feedback, and support to grow with the company. If you do not know what your employees are looking for, then you are taking them for granted.

Take a moment and think about how poorly your business would function without your top employees. There are direct and indirect costs involved with replacing top talent:

\- Lost revenue

\- Knowledge base walk right out the door

\- Recruiting time and expenses

\- Training, learning curves, acclimating them with your business cadence, etc.

There are a few things you can do to fix this. Think about what your company can do to improve job satisfaction as described in the last chapter. Empower your employees to take ownership and greater responsibilities so that they feel more valued. Find out how to go about this by engaging your employees. Get to know what they work for, their passions, and what motivates them. By now, you should find your role as a small business owner start to shift from managing processes to engaging and coaching your employees. As I have alluded to earlier throughout the book, the best approach to engaging your employees is to coach them.

##  3-6 How to Coach Your Employees[33]

We talked about how transitioning from being a judge of performance to being a coach to your employees already, but this section details how to go about doing it. I think we can agree there are many benefits to coaching, both for your employees and yourself. Your role is to be an attentive resource, a support center, and a cheerleader.

So, where do you begin? Well, it begins with you. Before you can dig deeper and change behavior, you will need to genuinely want to help another person fulfill his or her true potential[34]. Then you will need to listen. Coaching your employees will take time with a number of engagement meetings, but you will end up with better communication and rapport, better job performance, and stronger motivation.

Benefits are abundant through coaching. You will witness improved job performance and more intrinsic motivation in your employees. They will be better trained and more confident in their duties. You will establish stronger working relationships with your staff, which provides you with an opportunity to learn more about what they do for you. They will find better integration and socialization with you and other counterparts. During your coaching process, you will enhance your image to the employees and they will likely be more loyal. Your employees will have a better sense of purpose and control. And you will find satisfaction in helping make your employees better employees and better people.

The process of coaching is to develop competencies within your employees. Remember in Chapter 2-2, key competencies are the combination of knowledge, skills, and behavior of the individual. These are the ingredients to job performance and ability, and they can be all improved. It is your job to hone in on the competencies of your employees and what competencies are required to excel at their roles. Once you have done that, you can develop them to achieve a level of conscious competence. This is them performing well with a complete awareness of what is required. Most employees begin with a stage of unconscious incompetence, where they don't know what they don't know. Some may know they are incompetent and seek your help to overcome. A few may be competent in their duties, but do not really understand why. These people may never excel and they would not necessarily know to ask for guidance. It is your responsibility as their coach to get your employees to follow the recipe and give rise to conscious competence. Also, it is up to you how you approach this, whether engaging each employee yourself or trickling down by engaging your managers and having them engage their direct reports. In any event, below are specific steps to establishing a coaching climate in your office and ultimately achieving a collective conscious competence:

1) **Build rapport with your staff:** the first thing you need to do is create a connection. Schedule part of your day to actively reach out to your staff. Make rounds to different offices and departments during the week or month, if that helps. This is a continuous process; when you get to end of the list, start back over and engage each one again. The goal is to communicate openly. Remind your staff over and over again that they should feel free to respond in kind. You could share experiences you have had, best told through stories about these experiences and what you have learned from them. Be approachable and available. Watch your body language and be aware that you do not always have to take a power stance. Sit down in an open chair to speak at their level. Be consistent every time with your approach and overall message and be consistent with each of the employees you engage. Your goal is to build a rapport with each employee by getting to know the whole person.

2) **Listen more:** after a couple of impromptu engagement meetings, you should begin converting toward listening more than talking. Figure out when to listen and ask questions. This may take a few times around before your employees feel they can share. Gradually, you can change your focus to listening more. You want to engage each one individually to reach them personally. It may help to find a private setting, such as at each employees' office or cubicle. Avoid distractions and interruptions during this time. Turn your phone off, if needed, and if approached by others, ask if you can follow up with them after you finished your conversation. The goal here is to listen for understanding. Find out each employees' aspirations, interests, personalities, etc., and their take on what is working and what needs attention. Get clarification where needed as your focus is to seek an understanding of deeper issues. Make mental notes of each employee on what makes them tick so you can begin to formulate how you can facilitate their needs. You may soon be able to tell each employee's level of competence just through listening.

3) **Provide feedback:** before long, you will be able to provide guidance, support, feedback. After you have heard what needs to be said, you can switch back to talking again. Look at the big picture of their overall competence and their places in the company. To give useful feedback, you will have to understand the necessary key competencies they require for the positions they are in. Provide direct, honest feedback, especially since this is part of the company culture you want to promote. Anything else would just be a waste of time. Your guidance should be to help them discover solutions as opportunities for them to be more competent in their jobs. You can take a counselling or advocate role, as needed, but in the end, you want them to perceive you, not just their boss, but also their coach.

Your feedback will define how they identify with you. Below are some suggestions to keep your employees responsive to your comments.

#### Giving feedback

\- Keep your body language in line because studies have found that nonverbal cues make up as much as 55% of the total received message. Voice quality makes up about 38%, and the actual words you say only amount to 17%. This means that feedback that is disingenuous would be picked up on by your employees. Always be upfront and honest. Then the sentiment of your total message would reconcile with the content of that message.

\- Use these three critical words in your comments to the employees: Feedback, Expectation, Result

\- Use statements starting with "I", such as: "I wonder if you had tried"; "Perhaps you could have..."; "Sometimes I find it helpful to..."; "I observed"; "In my experience"; etc. You will likely have to rely on your own experience in relation to the feedback. You have an expertise and you have the vision on how you want your employees to function.

\- Relate to performance, not the person. The first reaction from your employees may be defensive, so make sure you are not offending on a personal level. Keep it professional and focus on performance and duties.

\- Try to be positive, but don't be afraid of expressing the harsh truths. Specific, Reinforce it, Don't forget it. Be specific with your feedback. Otherwise, it will be up to interpretation and may get misconstrued. Reinforce your message as often as you can to make sure your employees stay on track. Don't let them forget it. Repeat the importance of their progress and their roles in the company.

\- Remember the rapport you established with each employee. Draw from those mental notes on specific differentiations each employee has. Try to tailor to the individual as much as you can. Often times, you have employees scattered all over the board that you want to get onto the same page and all marching to the same beat.

\- Prepare constructive comments going into each meeting. Feedback that is specific will be better received. Make sure you get acceptance before you finish the meeting. This should be an emotional commitment. In follow-up sessions, reinforce and monitor the progress.

\- Specify the gap between an individual's performance and what improved performance would look like. Get their opinion on how they feel about that and what steps they may want to take to get there. It may help to develop an action plan together. This will ensure commitment. Then you can monitor the progress and report on that during future meetings.

\- You will know when your feedback is successful when your employees become open to change and consideration.

Giving feedback can be challenging because you want to implement changes, if necessary, but you also want to get your employees to agree and commit to those changes. Below are steps for your employees _receiving_ feedback and it may make sense to share these with them prior to you giving supportive feedback.

#### When receiving feedback

\- Listen carefully. It is natural to feel defensive, especially those who are set in their ways and averse to change. Rather than defend, think about how these changes in the feedback can be beneficial to the role.

\- Ask for clarification on anything that is not completely clear. It is always best to double-check the message that is being communicated. The best way to do this is to repeat back the message in your own words.

\- Pause and think before responding. Consider the feedback for a moment before jumping to conclusions. Whether it is unexpectedly good or bad, calm yourself from erupting emotions and try to think through the feedback logically.

\- Ask for examples or situations to help paint a picture of the feedback being expressed.

\- Accept it positively for consideration rather than dismissively. The owner of the company is taking time for one-on-one conversations; it would be to each employee's benefit to take careful consideration to the feedback.

\- Respect and thank the person giving feedback.

The importance of feedback for coaching is to show support, while nudging them onto the right path. Your guidance should provide for all of your employees' improvements in communication, rapport, loyalty, job performance, and motivation. While taking steps to improve all of these attributes through coaching, be sure to avoid some of the common pitfalls.

#### Coaching pitfalls

\- If you are inaccessible from the beginning, you may have a much harder time engaging your employees. If you start strong then fade out, they will notice how much you value following through.

\- Don't be late. Set meetings on the calendar and strictly hold to them. Keeping people waiting is a power move that you do not want to apply at this occasion.

\- Managers often find themselves to be more results-oriented than people-oriented. Try to think through the progression of person triumph for the employee. Remember, your focus for coaching is on the individual. The time and effort you put into your employees will return many times over later on.

\- Likewise, if you show that you are unconcerned with career development, you will not get nearly the reaction you would if you demonstrated your interest in the development and well-being of your employees. Coaching is about them.

\- Practice patience. You must acknowledge early on that it will take a series of engagement meetings to start seeing noticeable changes. Being too impatient may quickly undo your progress.

\- Managers tend to be hypercritical in their feedback. You should focus on certain areas for improvement at a time so you do not overwhelm or devastate your employee.

\- Following criticism, managers may be stingy with praise, which is not being constructive at all. Your employees must already be performing at some level of excellence for them to still be employed there, so acknowledge what they are good at and focus from there any deviations that need attention.

\- All this time and effort to setting up meetings and following through is admirable, but if you are poor at listening, the life of this momentum quickly diminish. Listen carefully and take notes. Let them see you taking notes. Little gestures go a long way show you place a lot of value on the employee.

Despite all your efforts, establishing a supportive relationship with your employees may still be hindered, by your employees. After all, it takes two to build each coach and coachee relationship. Next are common coachee pitfalls you should point out to your employees, because despite their best efforts, it just may not click in some circumstances.

#### Coachee pitfalls

\- Employees that simply do not commit during coaching meetings are doomed to fail. People who are complacent are generally averse to change, so without even realizing it, they may be reluctant to commit to the guidance. You will have to do your best to convince them that active participation will benefit them in the end.

\- Some employees have different ideas of what these engagement meetings will be like. Unrealistic expectations may keep them from executing on their parts. You may decide it worthwhile to make it a brief topic to discuss what those expectations were and why.

\- Defensive attitudes are probably to be expected during the first or second rounds, but beyond that, if employees continue to be defensive, then you may need to change up your approach. Remind them again and again that these meetings are for them with the objective to make them better employees. Many know that nothing in this world is free, so there must be a catch. I am sure many will fear that behind your support is some sinister prelude to "clean house" with a series of layoffs. Hopefully by this time, any employees that were deserving of dismissal would not be playing a part in this coaching exercise.

\- Some may overcome defensiveness just to end up being passive. A silent protest against your help can be just as damaging. Look for ways to get them actively participating.

Thankfully, there are some techniques that will help you to overcome coaching pitfalls.

#### Remedies to coaching pitfalls

1) **Look for hidden talent:** one the great advantages about these engagement meetings is that you will likely learn some things you did not previously know about your employees. You may find out about talents or passions they have that you may be able to adopt when aligning strengths with opportunities. You need to keep a watchful eye for these during your conversations so they are not overlooked.

2) **Provide encouragement:** keep a positive attitude throughout this process. It helps to coax your employees through encouraging words. Support them along the way by being their cheerleader and facilitate their needs right away. Clear the way for your employees to progress.

3) **Explore new possibilities:** you may be surprised to find out your employees would be better suited in a different role. As time permits, you should allow those employees the opportunities to try out other roles to see if there is any interest. It may come as a surprise to those employees as well. The impression here is that this is an opportunity granted only by employers who truly value their employees.

4) **Help the shift paradigms:** don't be afraid to shake things up. Move people around. Change the way things have always been done to more efficient processes. Change the organizational structure from departments to silos or vice versa as necessary. The more information you have from engaging and coaching your employees, the better you will be at aligning everyone's strengths. The focus remains on your employees, but in turn, these efforts benefit the company as well.

5) **Celebrate wins:** it is a wonderful thing to see your employees blossom. When this happens, be sure to show praise by honoring those employees who put effort behind self-improvement. Set an example for others still trying to find their way. This is a cause for celebration, so you should act on it.

In the end, you should start to see a return on your investment in your time and effort in the form of a collective conscious competence. That is the point where all of your employees know they are good at what they do and they know how to grow and succeed. As you look around, you should see improved job performance and motivation in your employees. Things get done faster through better processes and with better quality. Your employees should have a better sense of purpose and control as they are better trained and more confident in their duties. Coaching is a deeper level of employee engagement that opens the doors to making your employees better at what they do. It empowers your employees and instills motivation, which puts your company in the position to grow. You are going to need your top talent to help the company grow. And through coaching, you can begin to tap into rewarding opportunities soon to come.

## 3-7 Career Path

Grow organically by promoting your employees into lead roles and department managers. Hire within first. The advantage in small business is that your staff lives and breathes the type of work that would qualify them for an advancement opportunity. Due to having fewer people than in a large organization, employees tend to have a broader scope of work and often wear multiple hats. Their individual responsibilities are greater. Acknowledge that by considering promoting internally before looking for candidates outside.

### Establish a Career Path

As you face a critical time of organic growth in your small business' development, you need to consider establishing a career path. Proactively take control of your human resources and build structure around what they do. Change the way you currently look at the organizational chart. Career paths build structure and attain a return on investment from a higher level of productivity and performance. Strategically enhance your workforce and improve job satisfaction at the same time. This not only provides your company the best chance of expansion and success, but growth with stability. It reinforces the hierarchical structure and helps you define the roles needed for success while better aligning those roles in the most strategic way that will allow your company to flourish.

What is a career path? A career path provides a future for employees by demonstrating opportunities to grow within the company. It is a dominant component of improving job satisfaction, as discussed in Chapter 3-4, because it provides your employees with a greater sense of purpose. You would be providing value to their earned efforts and transition each of their jobs into a career with purpose. Suddenly, you have a workforce that will be more likely to enhance quality and productivity as well as overall company performance. Additionally, it better aligns the efforts of your employees with the company. Instead of reactively hiring from the outside as people leave, you can shift your focus to proactively hiring entry level positions only and grooming your employees from within.

#### 10 steps to establishing a career path

1) **Empower your employees** (Chapter 3-5): you need to take steps to establish a deep level of trust. Allowing employees to take the appropriate action without your managers hovering will, not only improve job satisfaction, but will allow your employees to take ownership of their workloads.

2) **Promote your top talent** (Chapter 3-9): introduce lead roles and even department manager positions. These are the best people you have working for you, so you want to make sure they stay with you. Promoting them will go a long way toward improving job satisfaction. They are also the most knowledgeable employees you have, so those are the ones you want behind the wheel. Draw out these positions on an organization chart and plan on who and when you will make these announcements. After careful planning, act swiftly. Make sure you hold discussions with your other employees so they understand why the choices were made and what your intentions are.

3) **Share the strategy:** hold company-wide meetings to discuss your strategy to move the company forward. This means expanding the hierarchical structure and grow within. This is not the time to keep everyone in the dark, otherwise you risk alienating them and losing some employees you want to keep.

4) **Dismiss underperformers** (Chapter 2-6): you need to make the hard decisions soon. You know who they are, especially if you conduct regular evaluations. If they are not pulling their own weight, it is probably time to let them go and move on. This is a necessary action to be sure you have the right people in your organization. It is a critical component of kicking your company's growth into overdrive. However, at first it will feel like you are going in the wrong direction, but you will need to take a step backward to take two steps forward.

5) **Promote from within:** instead of replacing them from the outside, consider promoting others to take on the newly open roles first. You could even hold interviews with a mix of candidates from outside the company and those within the company eager to take on a new role. However, to truly establish a career path, you should consider hiring entry level only and work on grooming your employees for expansion later on.

6) **You know your employees:** stop reactively hiring as people leave and promote employees from within. Instead of interviewing and hiring candidates from the outside. You can only think you know their professional work history from a couple of interviews and light research, but you can be much more confident on the degree of work history from someone already working for you. Additionally, you could take steps to groom them to develop your employees to reach the next level. Hiring temporary employees in a temp-to-hire arrangement is acceptable, but you should avoid outsourcing or hiring temporary employees over the long term because it will cost more and the relationship will make it more difficult to promote and control. Get everyone on the same team.

7) **Invest in training** (Chapter 3-8): get your people the resources they need to improve their own workflow. It will be perceived as a benefit with particular concern for your employees' well-being. Moreover, you are investing into your own business because your employees are the resource that will drive your company to success. Training should be industry and job specific. You should encourage them to learn the latest best-practices for their own positions, as well as the position next in line, provided they could be eligible for a promotion at some point.

8) **Write out job descriptions:** part of defining the hierarchical structure is to clearly establish job descriptions. This will put pen-to-paper on defining what is required of the employees and what they will need to accomplish to be considered for a promotion. The byproduct is stronger objective settings and evaluations as a result by better tying directly back to the employees' expectations. Remember, employee objectives should always align with the company goals overall. Defining the roles helps your company grow.

9) **Write out the milestones:** part of establishing a career path involves setting achievement levels to be eligible for a promotion. As you define the job descriptions, you should think about what major milestones must be met before even beginning any consideration for a promotion. Once those are met, then you can review performance attributes, such as what was done to accomplish the requirements, how well he or she worked with others, the degree that they went above and beyond, and overall performance. Be sure to share these achievement levels with everyone early so they have a goal in mind. Tie these in with the employee objective settings and witness the development of a stronger workforce.

10) **Introduce cross-training** (Chapter 3-8): this is an opportunity for your employees to learn how to handle the workload of others, which has wide benefits for the company. Despite the fact that it takes time away from the day-to-day, it is again an investment back into your company. Cross-training will further improve job satisfaction because it will allow people to take real vacations and truly disconnect without having to worry about the workload while on vacation. It also provides the opportunity for others to appreciate the workload of their peers in other departments. Further, employees will understand how their role plays a part in the bigger picture. They will see first-hand how their efforts impact the company and bring greater value to what they do. The idea is to generate a sense of pride working for the company as it grows. In turn, you will have reduced turnover and a stronger workforce.

These steps define what is needed to reorganize your employee structure today to maximize the level of productivity and performance to reach a new level of organic growth. Your employees will be better off for it and you should be able to feel confident that you have the right people driving your business forward. Promote your top performers and only hire entry-level positions.

### Match the Person to the Role, Not Vice Versa

The growth of your small business often demands restructuring, especially in the beginning, which may require different staff members with different qualifications from what you had before. Define those roles first, without any consideration of the people in your office now. Only then, consider how you can go about filling those positions. You may find that your current employees may already be the best fit for some of the roles, but you may also discover that you need to hire and replace from the outside. You want the best person for the role once you have defined what that role should be.

A poor hiring decision will affect your bottom line and stifle growth. Not only will have you wasted your time and money in the recruiting and hiring process, you now will have to spend time fixing the problem.[35] This holds true for keeping an employee even though he or she cannot quite keep up with the changing demands of their role. Sometimes keeping employees with dated qualifications is like making a poor hiring decision.

To avoid this complacency from developing into a lethargic team, you may need to restructure your human resources to catch up to the demands of your growing business. Doing so takes strong consideration and hard decisions:

1) **Strategize:** don't consider how things have been run in your business in the past. Instead, come at it fresh with a new vision of how you would like it to be. Define the positions and the purposes for each. Perhaps a full job description will get you thinking about what all is really needed in an individual to be successful at this position.

2) **Focus on the role for the company:** continue to disassociate the need of filling these positions from the available staff you currently working for your company. Instead, think about the employee qualifications that would best fit each position.

3) **Employees are now candidates:** consider your current staff only as potential candidates, as if they were applying for the position. It may help to interview each of them as if they were candidates off the street. If you really want to shake things up, you could post job requisitions and interview new candidates along with your more-familiar candidates. Now is your opportunity to unload the baggage and reorganize.

This is the time to rethink your HR organization. If you want to make your company stronger and more profitable, you will have to make critical business decisions. If you do end up having a role to fill from the outside, then make sure you hire the right person for the job.

### Hire the Right Person, Even If Less Qualified

Hire the qualities of an individual, not only by their current qualifications. Your top attributes when looking to fill a specific role should be the characteristics of the individual. Most employers get caught up trying to match specific qualifications with the open position and end up overlooking how well the individual can adapt to the workload, environment, and company culture. Determining whether certain candidates can "fit in" goes way beyond their work history.

For example, interviewing an accountant that has experience with QuickBooks Online may be overlooked when the position requires the use of Great Plains Dynamics. This is a big mistake because this particular individual may be quite adept toward learning new processes and new software. So, instead, a candidate with lesser experience and understanding of business workflows may be selected, and then it will be too late.

The best candidate is someone that can adapt and learn. You should be looking for someone that has a great approach to new challenges. Instead of asking about qualifications, you could ask them to describe their approach to learning how to master their critical processes or software in their previous position. Have them answer scenario-based questions to learn how they might tackle a problem. Ask them to tell you a story about how they have grown or even outgrown their previous positions. You want people who are hungry for advancement.

When in doubt, do not hire -- keep looking. Hiring the wrong person can be a very expensive mistake. Take your time to get to know your candidates and think about how well they would excel in the open position. You should hire with confidence. So, be sure to hire the right person based on characteristics, even if they are not necessarily the most qualified.

Establishing a career path is an excellent way to restructure your human resources for growth. Focus on the roles and the requirements for the needs of the company, not the individuals. These roles, performed successfully by your employees, are the resources of the company, so think in terms of your company in growth mode.

## 3-8 Training and Cross-Training

Training is an extension of the investment in time you will need to make for your HR growth transitions we have been talking about. The effort you pure into training will return with remarkable results. There are many good reasons to provide training options for your human resources. Make your employees more successful, and they will make your company more successful. Employees tend to learn in different ways, so, thankfully, there are different types of training you can administer. Correspondingly, you should consider having your employees develop desktop procedures and begin cross-training.

Conducting in-house training takes a major time investment. It takes time away from the day-to-day workload for each of your attendees, it takes time away from your resident experts to teach others, and it takes time to prepare impactful materials and training guides. With so much effort taking away from daily work, it is no wonder why most small businesses tend to pass on training. Regardless, it is worth it because training your employees comes with many benefits. There are numerous reasons for training:[36]

\- **Recruiting tool:** make positions at your company more desirable by showing applicants that you provide an environment that supports career growth. Training employees allows them to learn new skills and apply them in a way that encourages them to step up toward a promotion.

\- **Promote job satisfaction:** employees you have already hired would appreciate the opportunity to grow as well. This is a type of benefit provided by your company to better equip your current employees to deal with problems more effectively. Additionally, they would feel more capable of expanding in their roles and they would appreciate the opportunity to earn more money. Focus on retention and making your employees better.

\- **Required training:** one law under which there are a series of training requirements is the Occupational Safety and Health Act, if they apply to your company and industry. Two areas of federal law in which training is recommended are sexual harassment and ethics.

\- Reactive solution: act on customer complaints and frequent problems that never seem to go away by acknowledgement alone. Training focuses the attention on solutions so that everyone in your company can take the appropriate action as soon as recurring problems begin to surface.

\- **Opportunities for top performers:** your best and most knowledgeable staff are the ones you would turn to for training others. This is not a chore, but an opportunity for them to transition into the experts in their field. Additionally, a chance to teach others about how to operate more effectively puts them on the fast track towards leadership roles.

\- **Knowledge transfer:** don't just watch your top talent walk out the door (Chapter 1-5). Get them to set up a series of training sessions. It is essential to preserve all that you can by the time that two weeks is up. Ask your exiting employees to do what they can to train others.

\- **Keeps the job interesting:** if nothing else, at least training sessions might break up the monotony by tugging your employees out of their comfort zones. Even if they do less than responsive to the content, at least they are more open to dealing with new subject matter.

\- **Train soft skills:** employees that are more sensitive to soft skills are more professional towards one another and to the customers while at the same time will be able to use these skills that could land them in leadership roles. Train your employees to better with their interactions.

\- **Safe islands:** train your staff on how to provide better all-around customer service by sharing in the same responses to frequently asked questions. Employees in some small businesses may go as far as to belittle other departments under their breaths to customers without even realizing it. Other situations may occur where one department blatantly blames another for poor performance. These have to stop immediately because customers just want resolution. Teach your employees to answer professionally and courteously. All of your employees, if asked by a customer, should have the exact same responses for frequently asked questions.

\- **Add efficiency:** clearly, the objective of training your employees is for them to tackle that learning curve; do more and do it masterfully. You end up with more work getting done with better quality, and you get it with added flexibility. This comes from your employees better understanding handoffs between teams and understanding the workflow in your business. Suddenly, you get suggestions for improvements to the current processes. You get better ideas and new procedures that eliminate waste. All of this opens the doors to cross training.

There are numerous ways your company can go about offering training. Everyone learns differently, so it is best to mix it up a little. Below are some types of training formats you can offer:

\- **On-the-job training:** this type of training is probably one of the most useful methods of teach new hires and those learning about other departments. It allows the new person to shadow the expert and follow in his or her footsteps while they complete a project.

\- **Coaching** (Chapter 3-6): we talked extensively over how to set up coaching in your office and the benefits of making your employees better at what they do. This is an extremely effective training method, but it involves a fair amount of time to dedicate.

\- **Lunch-and-learn training:** this format is probably the most agreeable to those averse to formalized training. Employees love a free lunch and would sit through just about anything to get it. Try to have your resident experts put on a training session periodically. Even if you make it voluntary, you still have the incentive of a catered lunch.

\- **Group discussions and tutorials:** these sessions are great for brainstorming solutions for a particular problem. They encourage a stringent topic focus that allows employees to chime in with ideas that may make processes better. Tutorials could be put on by your management team or outsourced to third-party industry leaders. Both group discussions and tutorial discussions are held in casual settings facilitated by an expert, but with an open forum to stimulate employee interaction. You may be surprised find some employees open up more in group settings, whereas others prefer a more individualized approach to learning.

\- **Online training:** an effective method of getting through to each employee individually is through online training. These sessions are held at a personalized pace and can directly test for understanding. Industry-specific and role-specific online classes can be found hosted by third-party institutions and will likely vary in price.

\- **Lectures:** a more formalized approach to learning is to have a speaker address your employees in a classroom setting. Speakers are usually effective at getting through to the audience regarding certain topics, but they tend to do so in broad strokes. These topics are often expressed through general real-world approaches, such as in case studies. The downside of lectures is that attending one would require many employees to be off-site at the same time, and inviting a speaker can be expensive.

\- **Third-party:** another solution to getting outsourced third-party training is with companies that specialize in collaboration and team-building exercises. Through role playing, employees can better understand the personality types and communication styles of their coworkers. These exercises can also be used to strengthen soft skills. Management games offer scenario-based issues that generally fall into gray areas with more than one way to come to resolution. Solutions here align better with practical approaches that can be used in the office.

\- **Handoff presentations:** earlier, we touched on presentations your employees could each hold to define their desk. A facilitator would turn floor over to an employee, who would cover his or her responsibilities and the handoffs, both the ones he or she is given and the ones he or she provides to others. This is a type of training for the whole group because it helps explain the entire company workflow. Employees better appreciate the work of others more and some may have new insights into better ways of doing things. You may get suggestions for improvements to the current processes. You may also get better ideas and new procedures that eliminate waste. All of this opens the platform to cross-training.

Cross-training in the workplace is the training of employees in one job function to learn how to successfully perform the duties in another job function. This type of training is vital for applying controlled growth in your company. At first, cross-training is useful for employees covering others while they are out of the office. That allows you to encourage your employees to take the vacation time they have earned. Later, though, you will find many more benefits to cross-training while employees get promoted into expanding roles as your company grows.

First, you will be able to mitigate risk of handling the gap left by a departing employee much more successfully[37]. Others cross-trained in that role can each take a piece to temporarily cover until a new hire can take over. Furthermore, your employees are more likely to reach an enhanced level of teamwork and better appreciation for what others are tasked with. Your best employees are likely to be the ones that are the most cross-trained. Cross-trained employees are likely to be promoted quicker than if they were not cross-trained. This is because they have more opportunities to learn and develop new skills. Consequently, cross-training generates motivation. As discussed earlier, an employee who believes their employer is genuinely concerned about their career development is likely to exhibit an increased level of job satisfaction and motivation.

Encourage cross-training throughout your company. It is an investment in time that will support many of the changes discussed in this section, better enabling your company to its growth potential. To start, you may want to get your employees to write up processes, or desktop procedures, along the way that can help others. Have your employees spend time and shadow each other, as time permits, to begin their cross-training. Then, feel free to institute some of the training methods listed above to strengthen their cross-training. The difference is that the focus here is on one employee being able to do the job of another employee. Finally, don't forget to openly communicate the purposes behind it and encourage employees to step up.

Training can provide your employees with the tools to make them better at what they do, better at communicating internally and externally, and better at process improvements. Discover your natural leaders amongst your top performers and get them equipped with skills they will need to grow into managerial roles.

## 3-9 Promote Top Performers

Company growth can only be done by having your employees step up and take charge. Your hands-on workload of a small business owner has to transition into the role of the company CEO. That means you need to learn how to delegate and rely on others to assume duties you previously held. Your attention will be needed at a higher level to maintain successful growth. You can focus on what you are good at to perform better for the company yourself. To begin this transition, you should first turn to your top performers.

### Leverage Department Managers

Your small business is growing and it is time to let go of the mundane details by passing management to your entrusted staff. Don't get lost in the woods; do what you do best from a big-picture perspective. This is your opportunity to promote your star performers into leadership roles. By now, you would have empowered your employees to do what they are best at with your company's best interests at heart. We talked about steps to give them real responsibilities by turning your top talent into managers. Your department managers will pass on their expertise, coach their staff, and better lead those reporting to them.

Finding individuals to be effective managers can be challenging, so you really should be looking internally before you hire from the outside. There is no greater recognition than to promote your top performers. They are already experts of your business, so let them make some of the decisions as managers. A byproduct of promoting from within your own team is that other employees will take notice. An increase in motivation will likely result because you will have just initiated a career path. Department managers can bring tighter controls by evaluating their own staff members. They will be able to respond quicker to a smaller subset of subordinates and increase your employees' job satisfaction. With a smaller span of control, the number of employees that report to managers, they may have a better chance of managing your staff than you do directly.

Rely on your employees. You have worked so hard to get them to be capable representatives of your company and brand. Select some of your star performers to become department managers and help maintain hierarchical control. The following steps may help you get started:

1) **Select your top talent:** you will need to choose the employee best suited for the role. Remember to define the department manager roles first, then look at your current employees to see if there might be a fit. The one you nominate should be considered an expert in that department for your company.

2) **Evaluate soft skills:** you should consider how strong this person is in soft skills, otherwise known as managerial and people skills. Having a vast amount of knowledge in one's department is not the only prerequisite. Consider how well your "candidate" can be at managing others.

3) **Privately offer the promotion first:** Get the employee in person or with the leadership team first to inform them of the promotion. Take baby steps during this time to make sure the promotion is well received. Sometimes people get promoted to the point of incompetence, so make sure it is the right move before making it public knowledge to the rest of the staff.

4) **Introduce the new manager:** schedule a department meeting for that team to introduce their new manager. Although important, this meeting does not have to be a formal ceremony of passing down a legacy. Simply make the proper introductions to the department manager filling this new role and talk about the authority, or the legitimate power, as well as the responsibilities that come with the role.

5) **Announcement:** publically announce the promotion to the entire company in an email distribution or in the next town hall meeting. It is important for everyone to understand that they should no longer be coming to you with every little issue. The department managers will be able to field usual day-to-day problems.

Don't worry, your involvement would not go away entirely; it would simply change. Instead, you would be evaluating the performance of each department as a whole, of which your department managers are the acting representatives. Your focus can shift to other factors to grow your business. This very important step towards organic growth that will have wide beneficial effects, but not all business owners are up to the challenge. For many small business owners, this is a scary step. Delegation takes an investment of time upfront when it would just be quicker to do it yourself. For some, they may not be ready to pass the torch because they feel like it would be giving up control. You may even enjoy working in the minutia. But, if you are serious about growing your business, you need to determine the best use of your time.

Small business owners wear many hats to keep everything running at a detailed level. Your focus needs to shift toward growing your business from a high-level position. Step away from those ties and begin to focus on the administrative requirements as your company grows. Your duties will be to promote your company and growing it externally as well as continuously applying ways to motivate your employees internally. You will need to safeguard the balance of employees between departments so that you are selling enough to keep busy, employing enough production to keep up with demand, and keeping up with support and inside sales to retain your customers. You will also need to make sure funds are in place to keep the growing production operational, as well as financing any capital investments needed for growth. The more your company grows, the more you will find yourself transitioning into an administrative role because you will be far too busy to manage all the different areas of business yourself.

As for the fear of giving up control, a simple change of perspective will allow you to realize that you will actually enlarge your scope and control. The difference between Startup and Growth stages in your small business's lifecycle is the reliance on the effective management of others. Again, delegation is an investment in time and requires you to change the way you approach your business. Before you realize it, you will have created a career path, you show you are serious about organic growth by promoting within, and you are learning how to delegate. This is your opportunity to promote your star performers into leadership roles.

## 3-10 Company Culture

Company culture is an important part of attracting, hiring and retaining top talent. Beware, because if your company is not taking steps to formulate and enforce the culture you want, you may likely end up with one you don't want.[38] Whether you like it or not, your company has a culture. It takes careful planning and consideration to establish the one you want. Is it too early for small businesses to worry about such things? Culture takes place wherever more than one person is gathered. As the business grows, the culture is set by the way the entire group does things rather than the way an individual does things. So, establish your company culture early[39].

### What is Company Culture and How Can I Get One?

Company culture refers to the beliefs and behaviors that determine how a company's employees and management interact and conduct business. It is a concept that tends to be elusive and abstract, so it becomes difficult to nail down. Company culture is the shared understanding that everyone in your company can embody. It could be based on a behavior, a goal, or a path to success. It develops organically over time from the cumulative traits of the people the company hires.

Company culture is not a list of perks and fringe benefits. It is a shared mindset of values that are represented in everything the company does. Culture is the relationship between decisions and what happens as a result of them. It includes norms and behaviors, but it also informs what we do and how we do it. It covers what other people inside the company do, how we are leading or being led, the mood of the office on any particular day, how annual reviews are handled, how employees are recruited, and where they find their motivation."[40] It is more central and important than you ever imagined and it is time for you to take control of your company culture.

Company culture comes from the top down. That means it starts with the company owner and management team. You need to define what the culture should be for your company first before expecting the rest of the employees to follow suit.

Many small businesses that have developed a company culture have started with some mantras that everyone can follow, such as how to treat one another, how to treat the customers, and how to be successful. They may have gotten inspiration from their mission statement, core competencies, as well as a code of conduct. It may also help to think about what the company stands for and what it means to work there.

Sit down and describe the kind of workplace you want, the kinds of people you want working for you, and set to translate those into action. Then, use those traits, values, and qualities you defined to publicize the culture, measure performance against them, and hire by those standards. To start, ask yourself these questions, keeping in mind the purpose, values, and behaviors that stand for what your business represents:

\- What pain do we relieve for our customers? What is our place in the market? What is the company's purpose?

\- What values do we stand for?

\- What is the personality and behaviors of our most successful employees and customers?

\- Why would someone want to work for us over our competitors? What values might candidates look for at our company?

\- What values do we want our employees to tell their families and friends about our company and where they work?[41]

Take time to hammer out the details around what attributes you want to pursue and then reconcile them with your desires purpose, values, and behaviors. Once you have a strong grasp on the company values you want to uphold, you have to lead by example from the beginning. Talk about it in group meetings. Change workflow procedures, if necessary, to match. Conduct regular walk-throughs to make sure these values are being executed by your employees. The focus is not to point out problems, but to point out things working well. Lightly engage employees in various departments and praise them. Follow up with their managers to point out better ways things can be done that is more consistent with the company culture you defined.

Your company culture may be implicit, like a general understanding. Often, company culture is implied, but there is no reason you could not define it on paper. It may help, though, to outline your company culture and share it with the rest of the company. It could be a handout, email, or even poster boards to post on the walls of shared spaces. This would help you promote the company culture so you can transition the company faster. Just because an idea is intangible does not mean it cannot be documented and communicated.

Congratulations, you may have conceived a winning company culture. But, beware, because even after all your efforts, the company culture you think you want may not align with what it takes to be successful. Fewer than one in four feel that culture was very effective in supporting business performance at their company. The majority felt that their organization's culture was largely disconnected from what it took to win. Too many business owners think of culture as a way to make people feel good about where they work and not as a way to help employees perform better[42]. It is much more than simply improving job satisfaction as an intrinsic motivator because of the widespread impact it can have on your company. There are compelling reasons for taking the time to understand and define your company's culture. If defined properly, it could seriously influence your company's potential for growth.

High-performing companies think about culture differently. They know that leading cultures bring drive to performance and they are also unashamed about results. Successful cultures are comprised of two interrelated and reinforcing properties. First, every high-performing company has a unique identity that differentiates itself from other businesses. They create passion for what the company does and how it goes about it. This unique identity is announced again and again to drum up this passion, in many ways like branding, except the focus is on how business is conducted. This identity gives employees ambition simply by being part of this company. Second, best performing companies develop distinctive characteristics that support this identity. They typically display a set of performance attributes that align with the company's strategy and reinforce the right employee behaviors. Below are seven of these attributes, where not all, but more than one are targeted simultaneously:

\- **Honesty:** demonstrate high integrity in all interactions with employees, customers, suppliers, and other stakeholders.

\- **Performance-focused:** driven by pay-for-performance, recognition, and other talent-management practices are in sync with the underlying drivers of performance.

\- **Accountable:** represent owner-like approach and authority to roles and duties and taking responsibility for one's own actions.

\- **Collaborative:** realize that the best ideas come from the exchange and sharing of ideas between individuals and teams.

\- **Agile and adaptive:** instantly pivot when necessary and adapt to changes in the external environment.

\- **Innovative:** enabling and encouraging employees to push the envelope in terms of new ways of thinking.

\- **Winning attitude:** strong ambition focused on objective measures of success, either versus the competition or other benchmarks.

A company that can define its cultural focus based on three or four of the above attributes can develop a strong company culture that will energize your employees, find the fast track to success, and get candidates wanting to work for you. Think about what is important to you as a small business owner and what attributes will give you the best opportunity for success.

Closely managing your largest and most expensive resource will have remarkable potential for growing your small business. As we discussed throughout this section, the secret to maximizing your human resources is to get your staff to be as passionate about your business as you are. Establish buy-in and get them to take ownership of their responsibilities. As long as everyone is marching to the same beat, your company will be in the position to grow.

You learned why it is important to respect your employees, empower them, coach them, and be benevolent towards them. This will put value into your employees and motivate them to carry your company. Engage and recognize your employees. Establish a career path by promoting your top performers. Then, build a company culture your employees will aspire to represent. Take effort to maximize your human resources in order to grow your company. In the end, you will find those growth opportunities as you turn your attention to managing whole departments instead of individuals.

## Take Control of Your HR and Grow Your Small Business

In closing remarks, please know that we want your small business to succeed, but to do that, you have to recognize that it takes an investment in time and effort. The need for small businesses to align goals and motivate their staff is even more important -- it is often a matter of survival.

We walked you through numerous approaches that progress into a pattern of growth potential for your company. Remember that the right tools are needed to keep everyone performing at their best. As a small business owner, you will need to find a solution that works for your small scale and learn it quickly. You need an HR tool like littleHR.com that is suited for small businesses, something to even help you through some tough times.

With littleHR.com, you can take control of your human resources by introducing pay-for-performance to your staff. Get them to compose meaningful objectives that will not only help their own careers, but lead toward the achievement of the company goals. Make sure your managers approve them. Set your predetermined rates for merit increases and profit sharing and begin to tie performance to compensation. Monitoring a performance trend is your ticket to identify notable changes quickly. Single out your underperformers and begin documenting your support to terminate them soon. Find out who your top performers are and get them geared for advancement. All of these actions on your part will result in a reduction in labor costs from turnover and cutting the fat by having employees doing more with less effort; and, all with better quality, thereby increasing revenues. littleHR.com can help.

But that's not enough. Beyond financial success with a better bottom line from bringing structure to your HR, you want to know how to use your human resources to _really_ grow your business like never before. To do that, you have to put even more focus on your employees to maximize your human resources. Start by engaging your employees and setting the stage toward building better job satisfaction and motivation through buy-in. Take the steps you learned to respect your employees, empower them, and coach them. Establish a career path for your employees in conjunction with recognizing and promoting your top performers. Delegate more, so you can go back to what you are good at. Then, build a company culture of significance and pride that everyone could stand for. After you have everything in order, you can follow up with training and initiate cross-training.

Human resources is your key because it is your most expensive resource and your most underappreciated resource. The result will be bigger departments with more employees earning more revenue and higher profit margins. We want you to succeed and by following the progression we laid out throughout this book, we believe you will achieve that success.

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