There is no substitute for sound HR management practices. It makes no difference
if you are a professional firm, retail outfit or contractor. It makes no difference
if you have 5 employees or 50,000. It makes no difference if you have seasoned HR
executives or not. Many companies fail to see the true cost of poor HR practices
and don't embrace the right ones until they get whacked in the head enough times
that it begins to hurt!
Great companies don't wait for the pain, they model best practices. This is not
rocket science, it's just plain common sense. By going through this calculator and
using your own figures you will see the bottom line distinctions HR That Works can
help to create at your company.
To watch a video of HR That Works president, Don Phin, explaining how to use the
calculator, click here.
Consider the cost of a poor hire(s). What effect do they have on a team going 65
mph when they enter it at 40 mph? How do backups, road rage and accidents sound?
How much did your last bad hire(s) cost you? $25,000, $50,000, $100,000, more?
- Cost of hiring someone without the necessary skills. (i.e. a failure from
- Cost of hiring someone with significant character defects. (In a recent
case a woman fired for her abusive personality received a 190K verdict for violation
of the ADA!)
- Cost of hiring someone with a drug problem. (2/3rds of all drug users have
- Cost of hiring a workers compensation claim. (Are you doing pre-hire physicals?)
- Cost of hiring a criminal. (How many felons does it take to make for a
- Cost of the wasted time and energy going through the hiring and enrollment
process. (It should take many hours and weeks to hire and train a new employee properly.
100% of that effort is wasted when that new hire leaves or is fired in the first
- Cost of the unemployment claim or frivolous lawsuit when you fire
them. (Remember, most employee lawsuits are poor hiring decisions that never got
Consider the cost of turnover. According to the HR That Works Turnover
Cost Calculator, a 50K white-collar employee costs at least 54K to replace.
This is an average figure only. One executive recently stated his loss of a top
sales manager cost him 300K easily!
- What if they take other good employees/managers with them?
- What if they take valued customers or clients with them?
- What if they were top revenue generators?
- What if they spread ill will in the business community?
- What if they take proprietary information such as trade secrets with them?
- What if they decide to start their own business and compete directly against
Consider the impact on your organization if employees were more productive - even
if only by 1%. For example, if your payroll is $2 million and you make it only 1%
more productive, the bottom line impact is at least $20,000. Probably more than
that since they are there to add value. For example, if a 100,000/year professional
bills $250,000 per year, making him or her 1% more efficient adds $2,500 directly
to the bottom line! If your average revenue per employee is 100K and you have 10
of them we are talking about $10,000. (Maybe even more given the synergies involved).
And - we are only talking about a hyper-conservative 1% factor. What if it was 5%
- Chances are managers are not 100% clear about what is most important to
company leadership. (P.S. You'll never know if this is the case unless you ask them).
- As Dr. Deming stated, chances are managers are recycling this ignorance
to supervisors who are in turn recycling their version of it to the rank
- Chances are nobody enjoys doing or receiving performance evaluations.
- Chances are your performance evaluations don’t improve performance.
- Chances are your performance meetings could be more fun and effective.
- Chances are if you have an employee suggestion system it has more dust on it than
suggestions in it. (P.S. there is a secret to making employees contribute.)
- Chances are you haven't developed Standard Operating Procedures (SOP's) for
the what and how of everything you and your company does every day.
- Chances are you haven’t captured your “best practices”
in a systematic manner. Which means some folks are doing the exact same activity
better than others because they know the “best way” to do things, while
their co-workers do not.
Consider the fact that most disciplinary systems were designed more than 50 years
ago, when management controlled employee performance and as a result owned
employee problems. The goal today is to place employees in a position where
they are most likely to succeed and then to let them "own" and
take responsibility for their problems. Let me show you how this works
by asking you this: is there anyone at your company that if they quit today
you would be relieved as opposed to upset? Then why are they there?
What damage will their continued presence create? What are people not telling you
- Most managers don’t understand the distinction between being responsible
for an employee vs. being responsible to an employee. Unless we want
to play parent games we must be responsible to the employee, not for
- Most managers discipline employees in a manner that sets off "fight or
flight" responses, not the taking of responsibility.
- Most managers do a poor job of rewarding good performance and spend 80%
of their time managing 20% of employees causing most of the problems.
- The failure to properly document poor performance is one of the main reasons
why we hesitate to fire poor performers.
- Do you have someone you can call on a regular basis to help you navigate
through rough waters?
- P.S. There is a way to get employees to take responsibility!
People can be very productive doing the wrong thing! Consider how many
of your $100/hour executives are doing $25/hour work. Consider that most of us feel
overwhelmed by the never-ending stream of information and accompanying
choices we have. Consider that our ultimate goal is to “control less
and accomplish more.” Are you working in your "highest and best
use"? Are others?
- What if all your supervisors and managers knew effective time management
- What if they were able to spend 80% or more of their time working in their “highest
and best use?” (i.e. if they make $100/hr, they are doing $100/hr. work at
least 80% of the time. Not $20 /hr work.
- What if they learned methods for delegating all other duties to subordinates
in a way that significantly reduces their propensity to make mistakes? (We will
teach you that method.)
- What if they knew a way to stay focused like a laser beam and didn’t
find their time gobbled up by everyone else’s “gotta-minutes?”
(Again, there is a technique.)
- What if they had an effective method for analyzing the use of their time? (HR That
Works users are provided 3 Excel forms to do this.)
People can be very productive and efficient, yet work in silos and not play team.
Consider that your experience on teams differs from most everyone else, giving you
a unique perspective on what it means to be a team member. Also consider the truism
that everyone thinks they are more committed in a relationship than the other person.
No wonder it is so difficult to play TEAM!
- Who wants to be on a team that generates more losers than winners?
- How are employees being incentivized for playing team?
- Have you figured out yet how to teach teams to support each other? (There
is in fact a very easy method to do this.)
- Does everyone on the team know the rules or is everybody assuming they
do? (We have a powerful form that can get everybody on the same page.)
- How are you keeping employees focused on the value of playing team?
Consider the fact that most traditional safety programs do very little to help accidents,
prevent frivolous claims and reduce any malingering on legitimate ones.
- Make no mistake, insurance companies don’t pay claims, you do (Ask
us to explain that to you.)
- Many companies pay a hefty insurance premium because their broker does not specialize
in worker's compensation. As a result, companies get poor advice on how to properly
classify employees, manage claims and lower their experience modifier. (Only work
with a WorkComp specialist)
- Many times your employees are in the wrong rating classification. (And
nobody knows about it.)
- Many claims are generated by a corporate culture. (And we can show you
how to fix that, too.)
Consider that to some degree all employer sponsored benefit and reward programs
are under-utilized and unappreciated. How much do employees appreciate yours?
- Does your health care program encourage employees to be healthy?
- Are your employees taking full advantage of any 401(K) type programs?
- Are your bonus, incentive and reward programs aligned with your strategic plan
and producing results in that direction?
- Do you have a formula for analyzing their effectiveness? (There is a great process
- Do your rewards create more winners than losers?
Consider the fact that the employee wins their lawsuit more than two thirds
of the time and that the average employment practices verdict exceeds $250,000,
with the cost of defense easily exceeding $100,000. And it’s only
getting worse, not better.
- Some 15% of employee verdicts include a punitive damage award exceeding $1,000,000.
- The average settlement of an EPL claim is $75,000
- It easily costs $35,000 to settle even the most frivolous lawsuit. The cost of fighting
a frivolous suit to prove you are "right" is even greater.
- Most employees won’t disclose compliance concerns to management. Whether something
wrong is happening to them or someone else. (Fortunately, there is a way to make
them do so).
- Managers fear firing poor performers due to litigation exposures. What is the cost
of keeping on dead weight because someone at your company fears a lawsuit?
- Remember, this is severity exposure, not a frequency one.
Adding It All Up
How much you would be willing to spend to avoid the above impact to the bottom line?
Perhaps now you understand the incredible financial distinctions a properly run
HR department can create at your company and how HR That Works can help get you
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