Building An HR Department With The Right Recruitment And Development Tools
Multi-unit franchisees are unique business owners. Not only do you own the business, but you also work the business, recruit talent, run the operations, oversee the marketing, and are ultimately the responsible party for human resources. Human resources is a complex environment and we often see the owner or a staff person taking on responsibility for these details on a part-time bases with a slew of other responsibilities. As such, it is easy to “step into” something that could have been prevented.
With this in mind, we asked Renay Winston, president of People Management Solutions, an HR consulting firm to provide his perspective. Winston shares an analogy of business owners sometimes acting like Dr. Seuss’ Cat in the Hat. The cat is a keen problem solver. He takes on all the challenges of getting things done and as he takes off each hat, he reveals a team of smaller cat allies who work together, collaboratively to solve problems. When you first start, you work on all the challenges to run the business but as things become more complex, you realize that you need a good team of allies to help make things better.
Winston believes that a human resources professional is one of those allies who can help you improve your business, and that there really is no question whether you’ll need someone with this expertise at some point in your growth. He reports that at last count there were more than 180 employment laws that govern the workplace. As such he has seen that it is hard for business owners, especially franchise owners to reasonably be expected to know, let alone master all of them. Therefore, he says it is critical to know when to bring in someone who does know. As your business grows, the legal requirements change significantly and therefore you need to ensure you have the proper person or team in place to ensure you do not “step into” a situation wrought with risk.
Like Winston, The Rawls Group has seen many business owners try to handle everything on their own until it’s no longer feasible. Franchisees, with their strong entrepreneurial spirit, are unique in that they typically own these areas even longer. However, the decision to move away from handling everything is based around the realization that time can be spent more advantageously on other things to drive the business.
Jeff Bannon, a partner with The Rawls Group, too often sees franchisees getting stuck only working in the business versus on the business, which impacts the organization’s ability to grow and achieve sustainable success. Securing HR functions is a fundamental first step which allows an owner to delegate the HR tasks and move from a weary taskmaster to the organizational leader that is required. Further, a commitment to growth is a commitment to finding/training high performing managers, which is often hard to find.
An HR department with the right recruitment and development tools will help ensure the right people are getting in the right seats. We asked Winston what milestones are most important to add HR expertise. He says that it’s critical to begin with the end in mind and establish a plan where you set the foundation that allows the ability to add the right help when it’s most needed. In terms of specific milestones, he shares:
- Startup Phase - Money is tight and it’s no fun to have to use your limited funds for a non-incoming producing person. In the long run hiring someone will save you money and a lot of headaches. You will need an external HR consultant and/or a labor and employment attorney to help you set a solid foundation based on the laws. Compared to the salary of a full time HR manager, outsourcing is more affordable at this stage. A good partner can help you set up critical processes and procedures like employee handbook, personnel files administration, required posters, and provide you with general advice that will keep you legal.
- 25 to 50 Employees - You may want to consider hiring a PEO (Professional Employer Organization). PEOs work with small businesses to help them manage payroll-related taxes, certain human resources functions, access to benefits, and other employer-related administrative functions necessary to running a business. They are especially helpful in the area of benefits and can provide access to benefits at affordable rates. This is because the PEO model typically aggregates the employees of many small businesses together to harness the buying power that’s normally reserved for larger businesses.
- 50+ employees - You should seriously consider adding an in-house HR manager. If you’ve handled HR up to this point by yourself, the 50-employee mark is the absolute last stop for thinking you can do it alone. The 50-employee threshold kicks off FMLA and other state and federal regulations. By trying to save money or expecting that your accountant or administrative employee can manage this level of complexity and regulation, you are putting your company at risk.
Winston says that there are two approaches to adding this critical position.
- First approach: Hire an experienced HR professional. They can come from any industry because the laws are the same. However, he says it is much better if the person has industry experience because the challenges are very different and there will be a learning curve for them.
- Second approach: Develop an internal person who will become the HR manager. Hiring internally makes sense from many aspects, and is the approach Winston recommends, because:
- it can show your commitment to growing your employees
- it allows you to retain your top talent instead of losing it to your competitors.
- the internal person is already aligned with your culture
- you know what you’re getting
- you can save money
To develop an internal person, Winston suggests engaging an HR consultant who will develop the individual and point them to the appropriate educational resources. The consultant will also serve as a reservoir of knowledge and a backstop for critical decision-making. The combination of a consultant with an internal person will be less costly than hiring a similarly experienced HR person.
Regardless of when you add a HR “cat” ally to your business, you will find that the person will help your business succeed and help you avoid the landmines that are out there.
Ensuring the legacy of your franchise starts with making sure you have your highest risk areas protected. Working with franchise owners and HR consultants like Winston, we have found that it is an area that is easily overlooked but can easily be protected. To learn more about Winston’s approach or his background and expertise reach out to him at email@example.com.
Kendall Rawls knows and understands the challenges that impact the success of an entrepreneurial owned business. Her unique perspective comes not only from her educational background; but, more importantly, from her experience as a second-generation family member employee of The Rawls Group - Business Succession Planners. For more information, visit www.rawlsgroup.com or email firstname.lastname@example.org.
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