SoundBoard Panel Discussion Opens Business Owners' Eyes to Common HR Risks by Richard Magid, SoundBoard Consulting Group, LLC
"The problem with most business owners is not lack of human resources knowledge or experience — everyone knows there's a risk. It's not taking that risk seriously that's the problem," says Gene Killian, an attorney with Killian & Salisbury, based in Clark, NJ.


    /Entrepreneurs News Articles/ - BOONTON TOWNSHIP, NJ, August 23, 2008 - Killian was one of four experts who spoke recently at an event hosted by SoundBoard Consulting Group in Boonton, NJ. The two-hour panel discussion, moderated by SoundBoard's Robin Adwar, offered practical advice on how to safeguard your business against HR risk.

Avoiding common pitfalls
The most common areas of risk exposure originate at the management level, says Killian. First and foremost, he warns against the casual "locker room atmosphere" prevalent at many businesses. With sexuality so prevalent in today's pop culture, this atmosphere can easily go unchecked in the workplace. It is important for companies to enforce a zero-tolerance policy. One good rule: "If you wouldn't say it in front of your mother, don't say it at work," according to Killian.

Absence of an employment manual and/or the lack of adherence to policy can also leave a business vulnerable. While everyone knows what an employee manual is, it is important for owners and managers to read and understand the details within.

A company's employment manual should not only outline the dos and don'ts when it comes to sexual harassment, race, religion and other areas; it should also spell out the procedures for reporting, investigating and resolving a complaint. If a federal or state lawsuit is filed against your company, these procedures can be used "as a powerful defense tool," says Killian, if the employee did not avail themselves of the measures in place.

And don't be afraid to encourage employees to speak up and report problems. "If someone feels listened to and taken seriously, you are way less likely to be sued. And if you are, you have a good defense," Killian explains.

The last mistake business owners often make is hanging onto underperforming employees for too long. While no one likes to fire someone, according to Killian, "Every minute you keep an underperforming employee around, you're increasing your risk and setting yourself up for a greater chance of disaster when you finally let the employee go."

Insurance protections to consider
These common sense guidelines can go a long way to protect your company against a lawsuit. According to fellow panelist Jack Reiner, three out of every five companies will be sued by a former employee.

"Even if an employer wins a lawsuit, you can still find yourself out of business," says Reiner, a principal at Springfield, NJ-based Warren G. Reiner Inc.

That's why companies of all sizes should consider Employee Practice Liability Insurance, which offers employers protection against claims made by employees, former employees, and potential employees. According to Reiner, Employee Practice Liability Insurance generally covers issues such as discrimination — including age, sex, race, or disability — wrongful termination, and sexual harassment.

But just getting a one-size-fits-all Employee Practice Liability policy may not be enough. It is important to go one step further and customize your policy, says Reiner. "There are a number of variables to consider, such as deductibles, co-insurance, defense costs, as well as coverage exclusions that can be added back in based on your particular business."

Employers should work with an insurance broker who is knowledgeable about their business to identify specific considerations, for example whether the employer frequently engages third-party contractors or conducts business oversees, Reiner suggests.

In the end, though, it all comes back to maintaining best practices. "One employee claim tends to lead to another," according to Reiner, and in order to access coverage in the first place you must meet certain guidelines and indicate the safeguards you have in place.

Finding and retaining quality performers
"Speed is the ultimate competitive advantage for any business," according to panelist Doug Duncan, president and founder of Your HR Solutions in Maplewood, NJ. Companies need to deliver quality products and services faster than ever before, and that starts with the quality of their employees.

"First-class employees give you a strategic competitive advantage," comments Duncan.
But finding and retaining them can be costly. Duncan offers an example of a 40-person company with 63% turnover. After calculating average wage, training, customer satisfaction, employee frustration, interviewing costs, ad costs, paperwork and other expenses, the total cost of turnover or risk of a poor hire for this company is a hefty $102,000 annually.

So, how do you retain good people? It may be more difficult than you think, according to Duncan. "While employees often believe most people leave because they want more money, employees often put that last on their list." He offers a helpful "LEAD" formula to mitigate retention risks — leadership, education, appreciation, and dollars.

The role of benefit programs in reducing risk
The right benefits program also helps mitigate risk by keeping employees happy, according to Scott Peloquin, CEO of benefEx Benefits Consulting in Livingston, NJ. By assessing the business culture and employee attitudes, you can design benefits plans that meet the needs of employees and makes the most of your company's investment.

Through surveys, employers can determine what is most important to their staff in terms of benefits, and tailor their offerings accordingly.

Says Peloquin, "The riskiest thing you can have is a disgruntled former employee. If your employees feel they're being listened to, it goes a long way to mitigating that risk."

As you can see, managing HR risk is a multi-step process involving establishing best practices and protecting your business from exposure. Though no business is immune from HR-related risks, a few common-sense steps — from hiring, training, and listening to tools like Employee Practice Liability Insurance can go a long way.

Further Related Resources:


Press Release Contact Information:

Lauren Canning
SoundBoard Consulting Group LLC
Marketing Director
6 Mars Court, Suite F-6/8
Boonton Township, NJ
Unites States of America 07005
Voice: 973-334-6222 x 103
Website: Visit Our Website