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Not Surprisingly, More Businesses Outsourcing HR

A recent article about small businesses outsourcing HR functions should come of no surprise to those in the HR field. With the legal complications involved in hiring, maintaining and ultimately terminanting employees taking its toll on small business operators, it is making much more sense to throw it to a PEO and let them take care of it.

These days, it is nearly insane for a small business to try to manage all of their own financials. They likely go the outsource route to outside accountants who take their scraped together financial documents, tell them what to do to maximize their deductions, and file their taxes for them. Now, HR is starting to go that way. Recruiting has been an indicator of that but now PEO’s are starting to go that way. The issue for HR departments everywhere?

Creep. Specifically, creep along the lines of routine job duties 30 years ago being too complicated for anyone other than specialists. Companies aren’t relying LESS on Accounting firms when they get bigger for the most part. As long as employing employees becomes more and more complicated (and with the slate of laws being considered from state to state until 2010, that is going to happen), more specialization is expected.

Now, of course, what is the big deal? After all, accountants are one of the highest recruited for positions in this country. The ever complicating tax code has given them leverage.

The issue is that working with a bunch of HR specialists in a Human Resources Office sounds like a special area of hell. Not only that, continuing education is going to become nearly required with advanced degrees becoming more and more standard. Can I see a test for HR managers wanting to enter the field? Oh yeah!

The issue, of course, is that it never had to go down this road. With a bit more partnership between business and government, we could avoid a significant portion of new legislation passed every year that makes it incredibly difficult for HR people to enter the field already.

Prediction for HR: more education, more training, more testing and more labor shortages. Of course, for all you smart guys out there, you’ve already figured that out since it is predicted for almost all semi-skilled/skilled profession in the US.

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Non-Compete Agreements are Bogus

If there is one document in the hiring process I hate to hear about, it is the non-compete agreement. If there is any single document that can kill a new person’s first day excitement, it is the non-compete agreement. If there is any single document that can rock the foundation of a loyal employee’s trust in a company…well.

Now, I am not questioning the legality of non-compete agreements (there has been quite a bit of legislation and court rulings that muzzle those agreements in many states) but under many circumstances, they simply aren’t necessary or are overly restrictive.

Now the idea behind a non-compete is pretty harmless: making sure your competitors don’t take trade secrets through taking top executives and other principle people of an organization. What it has become is a tool of intimidation with overly broad definitions of competitors (or none at all), blanket use throughout all levels of an organization and long timeframes.

When are non-compete agreements ok? Under the following conditions:

  1. The competitors are defined. Competitors should be clearly labeled and/or conditions of being a direct competitor being clearly defined. There should be no doubt that if you work for ABC Widgets and you leave to go to work at XYZ Widgets, that should be a clear breach.
  2. The people covered hold clear and concise trade secrets. The receptionist, worker bee or your general worker should not be covered under a non-compete. Neither should most of your middle managers for that matter.
  3. Those covered should be highly compensated. $100k+ sounds about right but it could be more or less. There should be a pay threshold though. It gets back to what a non-compete should truly cover.
  4. Two years after termination should be the maximum they can be enforced. I don’t care what industry you are in, if you can’t figure out a way to survive in two years, you deserve to be out of business.

Ultimately, I hate non-compete agreements because they stiffle innovation in a time when it is so desperately needed. If you see something that needs to be changed and your company won’t listen to you, you are out of luck and your ideas get lost. And that is really too bad.

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Increasing Benefits Costs to At-Risk Employees

A recent trend in benefits is to pass some of the increasing costs of medical insurance to at risk employees. One of the easiest assailed groups are smokers. Not only are they easily identified but they are not faultless in their affliction (like some cases of obesity or cancer with genetic predispositions). The second reason is that smoking is verifiably expensive. A recent study cited the figure of 6–8% of total medical costs in the US is attributable to smoking and nearly one in five deaths can also be traced back to that cause. While 6–8% may sound like chump change, health care costs in the US comprise of 16% of our GDP. Or nearly two trillion dollars.

While workplace bans on smoking while at work isn’t uncommon in the new century, stricter methods have been put into place. In 2005, there was a well publicized case about an employer banning smoking outright as a condition of employment. And it is becoming more of a common practice to charge smokers more for health care coverage than their non-smoking colleagues.

This trend has outraged some rights groups while gaining applause from health groups and insurance companies. On one side, it is unfair to dictate what your employees do outside of work. Not only that, but there are greater risk factors where employers will not penalize an employee. For example, alcoholism may go untreated for years and may do damage far beyond that of moderate to light cigarette usage. On the other hand, employers want to find ways to decrease costs and maintain profitability. Discrimination on the basis of smoking is not against the law so employers are free to do as they please in this arena. And this sort of discrimination isn’t uncommon anymore. As an example, companies routinely give health care discounts to employees who participate in their wellness programs and discriminate against those who don’t participate.

Where do you come down on the issue? There are obviously very polar positions on the issue but there is definitely some middle ground. I’d like to hear your take on it before I post my next post in which I will go into my views in great detail.

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How to Break into the HR field?

Many people who read this blog show an interest into breaking into the HR field. While I may question their sanity for this, I only know this is a popular topic because I get e-mails about it all of the time from all types of people. I realize that I keep repeating myself over and over again. So now I am going to put this out as kind of a catch all for those questions so this may be edited from its original version.

First of all, it is not very difficult to break into the HR field. I did it, and I don’t think I am that smart. That being said, it can appear to be very difficult to break into it from the outside because it is very difficult to do it from the outside. Most people want experience if they are hiring from the outside and don’t want a fresh face from college to get them into legal trouble because they mess up application. So here are the ways to get in with no experience:

  1. Work from the inside. College education: not required, additional educated needed though. Depending on your company’s size and culture, you may be able to break into HR from the inside. Good companies love internal HR hires because they understand the culture already. You will probably be required to get an HR certificate (PHR is a nice one that is recognized pretty well). Again, depending on your company, you might get this paid for (at least partially). The bad? Not a sure thing and totally cultural dependent. May mean you get crappy pay for a while.
  2. Start as a recruiter. College education: likely to be required. At many large companies, the easiest way to break into the HR department is through the internal recruiting team. Recruiting is relatively easy to understand and companies seem to be comfortable hiring directly for these positions plus they typically pay really well. The bad? Likely long hours, traveling, tons of time on the phone and … well, some of the stuff I complain about recruiting in this blog. Of course, I don’t think that stuff is that bad so.
  3. Start at an outsourcing firm. College education: likely to be required. HR outsourcing is big business these days and as such, outsourcers may be more willing to train entry level people because of increased demand and repetitiveness of tasks. Everything from payroll processing, to third-party recruiting, to full on HR department outsourcing is covered here. The bad? Third-party recruiting can be good money if you have the skills but almost everything else is going to pay you…well, entry level wages.
  4. Start at a smaller business. College education: probably. With the economy still doing relatively well, starting at a smaller business can be a good start to getting in with experience at other firms. Smaller businesses usually go after people with strong entrepreneurial drive who are willing to learn quickly and do a lot of other things inside the business. Targeting businesses between 25–50 employees (depending on industry) can be key to this. The bad? You might get pushed into doing payroll or other things at a smaller business and you may not be able to have an appropriate mentor like you would at a larger company.

These are the four places I would start if I had to do it again. Me personally? I did a combination of 2 & 4.

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American Idol Interviewing

Like many of you I am sure, I watched the first episode of American Idol. Of course, being the HR nerd I am, I began to think about if I could do this sort of interviewing style for jobs that I have open. I think the reason this is so attractive to people in my profession is that sometimes we die to give honest feedback to a candidate who needed just another step or two or someone who was way underqualified. I’d love to be able to say “that was awful” at the end of a bad interview. Of course, there are several reasons why judging singing is different than evaluating a candidate:

  1. Candidates typically have a skill set that you can’t spot within 10–15 seconds of them opening their mouths and then confirm over the next minute and dismiss them abruptly
  2. There are a few more consequences to choosing the wrong person or missing out on someone that was good because of your trigger fingered decisions
  3. As you’ve seen on the show, people are in denial about their deficiencies. Even under the most honest conditions, the people who are often the worst will never be convinced of this or improve

That being said, there are some things we can learn from American Idol that does apply to the interview process:

  1. Interviewers often have a hidden bias where they make snap decisions about a person before they even open their mouth. We aren’t interviewing pretty faces to be put on stage though so we must be aware of this bias.
  2. Cut the interview short if it isn’t going well. You’ve seen people being cutoff before and some legal guys will probably shake their head in disagreement. If you have the awareness to make the following judgment during the interview, pull the plug and both of you get on with your lives with less time wasted: If the interview went perfectly from this point forward, I would still not hire this person based on past questions. If the answer is yes, you can probably find something to fill the extra 15–45 minutes.
  3. Be honest with the candidate. As indicated above, many will not take your suggestions to heart but the few that you do connect with will often come back better equipped or refer people that they know because of your candor.

On second thought though, if you are going to be as honest as Simon Cowell, you may want to consult your legal department first. On the other hand, you probably shouldn’t tell your legal department about this post at all. If they hear I have suggested you subject your interviewees to a round of American Idol auditions, you may be “voted off” as they say in the biz.

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What is Web 2.0 and how will it change recruiting?

I don’t know.

Okay, that is a lie. Fittingly enough, Wikipedia sums up the Web 2.0 question pretty nicely (itself, of course, being part of web 2.0). If you don’t feel like reading through that, I believe that the two bedrock principles of web 2.0 are collaboration through technology and using the web as a platform for programs.

There is quite a bit of talk about how this will change recruiting immensely. After all, the collaborative part sounds pretty sexy. And we have been promised so much! The end of newspapers, job boards and best of all, never having an open req that you can’t fill. Imagine being able to connect with all kinds of different people immediately. Being able to brand your company, have positive relationships with individuals and make contacts that make you a better recruiter.

Sounds pretty great, right?

Some recruiters are latching on to any web 2.0 tool out there (sometimes shelling out some significant money for it). And why wouldn’t you, especially if all you’re told is this is the wave of the future?

The problem is that these solutions are often incomplete. Let me lay out the typical steps here:

  1. Web 2.0
  2. ????????????
  3. Success!

And that’s fine (and necessary) if you are an entrepreneur in a new technology field but if you’re a recruiter, that’s not going to help (at least not now). Whatever advantage you get is going to be focused on certain industries, in certain markets, with certain job types and still isn’t going to be all that fantastic. Even then though, there are still advantages to staying on the forward edge of technology and I do not wish to chastise those who spend their time (or money) doing this. I do this myself and no, I don’t have a self-hating personality.

If your organization is having a problem filling reqs, I am willing to bet that 99% of it is a human deficiency and 1% of it is a technology deficiency. That sounds awfully mean doesn’t it?

Most organizations with a great overall talent strategy aren’t struggling. Or, if they are struggling, they are struggling in ways that other companies wish they were struggling. Premiere companies (and ultimately the people) don’t struggle because they have good execution throughout their entire organization. They market their jobs like they do their products, recruit as much as they need, they on-board and train for ongoing success, they retain the people they need and they network constantly (and have been for years before social networking). That means missing one web 2.0 trend doesn’t kill them and if something big came up technology wise, they would have both the wisdom and experience to make the changes that align them. GE and Exxon didn’t die off when mailing or faxing resumes became a thing of the past.

Then there is the “other” category. These guys don’t have a great talent strategy. And “these guys” are a majority of the companies out there. Whenever you have a poor talent strategy, it is easy to point to technology as a culprit. It is easier to fix technology (or try to compensate with it) because it is more difficult to face the fact that your strategy needs work.

I guess my point is web 2.0 is still very targeted. If you want to get the most bang for your buck though, you can start by making your organization people focused and branding your company in the employment market. Web 2.0 will sift its way through and will probably come up with some great new deal that will help recruiting and possibly even change the way recruiters operate.

That time is not now though. While keeping a close eye on the upcoming technologies is worthwhile, keeping a closer eye on your processes, branding, networks and company culture is more important.

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Balance between HR and Recruiting

There is a fine line to be drawn between HR and recruiting and quite a bit has been discussed regarding these two. Some have said they should be separated and I think I can understand that. Recruiting can often be part of the brand experience of a company, it can be marketing and it can be sales all in one. Those three things are usually not associated with traditional HR departments. How strange could it be to try to shove recruiting into HR then? HR, the red-headed stepchild of either the Finance or Legal departments in an organization does not fit in with recruiting, the sexy, meaningful realization of marketing and brand awareness at the local level(s). After all, it is one thing to sell a product to a customer, it is quite another to sell a lifestyle, a work environment and a position to a potential employee.

So why do I think HR and recruiting are not only connected at the hip but have an incredibly close relationship in a “global economy”?

Simply stated, it is all part of the employee lifecycle. And managing that throughout with reasonable offers and expectations set in front, training and employee development, and exit planning so that recruiters can be prepared for the next batch of hiring.

When unplanned turnover happens, it is often (but not always) avoidable. And when turnover happens, it is a burden on a recruiter (who may already be sitting on several recs). Wouldn’t you rather have your recruiter working on new and high worth positions rather than scrambling to replace a guy that you could have retained? Whenever someone is recruited that ends up having avoidable job fit issues, wouldn’t you rather that the recruiter be closely aware of the issues and to work with traditional HR to either solve the issue or to move forward with someone else?

The biggest reason is that separating HR and recruiting will lead to mistakes in most organizations. Mistakes that are both burdening on the employee as well as on the company. Not only lost revenue but lost opportunity. And with the success of both HR and recruiting depending so much upon each other, there has to be a strong, departmental team.

The reason I post this now is because it is a conflict I see daily in my current position. And I know that as we get bigger, the problem and balancing only becomes more stated and more complex. And while it will always be a balance, it shouldn’t ever be a conflict. Because what is best for recruiting is best for HR and whatever is best for HR is best for recruiting.

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Terrible Job Ads

There is one employment agency in town that runs some terrible advertisements for employment and I thought I should share with you. I am not going to share the name or location but I don’t think it really matters. Ugh:

Exuberant HVAC Service Technician
GOING FAST SERVICE TECHNICIANS! Clean driving record one minor infration ok if longer than two years. NEEDED dedicated workers, drug free, dependable, responsible does this sound like you get? WE WANT YOU! Call today before 10am or after 4pm. Ask for Mercedes or Rayn we are here to make the hiring process easy for you. Never a fee to you! So what are you waiting for apply online, fax your resume and call to make sure we received it again before 10am or after 4pm. We look forward to meeting with you!

Shipping and Receiving Clerk
Growing company looking for growing team of workers. Experienced in shipping and receiving clerk, plus refrigeration experience as shipping/receiving clerk. Do you enjoy working in a warehouse even in the winter but the best part you get paid! Are you dependable, responsible, team player, reliable? If yes, WE WANT YOU ! Apply online now. Call us after 4pm or before 10 am for inquiries about this position. Ask for Ryan or Mercedes please. Have an AWESOME week.

Dairy Wholesale Assistant
EXTRA EXTRA READ ALL ABOUT IT! Medical benefits provided. Dreamy about numbers, fast pase, crazy phones, personable? Does this sound fun yet? AP/AR assistant and fast data entry at least 90 kmp or 5400 kmh. Awesome phone voice, and computer skills using windows based program, word, email, multi-task, order taker, filing, backup reception, attention to detail is a must, responsible for counting out route drivers deposits. In search of experienced assistant in a high volume office with 9 sales persons and responsible for calling 500 customers. Outstanding benefits and pay for the right canidiate! IS THIS YOU? Then apply on line and call us for an inquiry call

Dedicated Sheet Metal Worker
This a evualation to hirer position! Great company to work for. Competitive pay. Do you enjoy sheet metal ductwork using a variety of tools, including: bending, notching and forming machines, riveters; test manifolds, including guages and hoses, leak detection devices; portable vacuum pumps, piping and fittings of brass, copper, steel or polyvinyl chloride (PVC) and sheet metal snips. Doesnt this position sound exciting with never ending challenges. Please, clean driving record only. Apply online and than call us for an inquiry call

Jack or Jill with many skills, and many hats
Looking for a little cash? Not a career position? Then you are the professional office personnel we our looking for? Do you like a crazy work environment, up beat, fun stress, answering phones, filing, taking messages for sale associates, stuffing envelopes, stuffing booklets, taking out the garbage. Starts at $7.63 hour, professional attire. Men: ties, dress shirt and slacks. Women: dress skirt suits, or dresses conservative in nature. Hours vary from week to week 4 hrs maybe 12 hours some weeks. Three line phone system. outstanding attention to detail, personable, awesome attitude. Does this sound fun yet? We wants you!

And I was going to highlight the good parts but it is pretty much all good. Or bad, depending on your view.

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Work Tip: Don’t Offer Copious BJs Over E-mail to the Person Taking Your Shift

It’s not a joke, it’s one of the first HR problems I had to deal with as a manager.

I was working as a manager in a student-run computer lab of a major university. We worked closely with a mixed group of classified employees and student staff. Since there were shifts between students and things always came up, we had an automated way of students requesting for people to take their shifts.

We basically had them send out a request to the listserv to be distributed to all staff regarding when their shift was available and whatever reasons they were looking to get it filled. One day as I was about to leave at 5:30, I get an e-mail that says:

To: listserv
From: “Matt”
Subject: Shift available

Thursday 3/31
5:00pm — 9:00pm
Building C

Reason: I have a big lab I have to do. Copious BJs to the person who takes this shift.

I froze. I re-read. I froze again.


I call Matt and tell him to come to the office right now. I call my IT guy and the other managers to have them come in. In between that time, I get e-mails from three people on my staff that can’t believe what they read. One of them is going to file a complaint with the Human Rights Department.

Thank God I don’t work for a university anymore.

Whenever Matt comes in, he is completely unapologetic. Whenever I tell him he is going to get fired, he gets defiant and starts asking me to cite what policies he has broken. I told him we work for a university that has a zero tolerance policy on sexually harassing words. This isn’t one of those things I could overlook, it’s something that we had to take care of right now.

After he leaves, I tell our IT lead to kill his account but he was going to go home first and do it later that night. That’s when I realized the advantages of having all the ducks in a row and pulling the cord before it goes down.

Matt sent an e-mail out about 45 minutes after our conversation. Whenever I received it, I was thinking that it was just sent to me. It wouldn’t be the first time, no doubt about it.

Then I read the message and I noticed the “To:” field said it was sent to the listserv. I again was shocked to what I saw. A diatribe by Matt regarding how “the man” (not making this up) had brought him down and that our corporate culture was an enemy of human rights.

It was laughable stuff, especially in sharp contrast to the note he had sent out not two hours earlier (not to mention the fact that we worked for a university). What floored me was that the e-mail was even sent. I called the IT guy at home and did what I knew how to do best. I asked a question:

“So did you turn off Matt’s access?”

“Of course I did. Why?”

“Have you checked your e-mail?”

“No.” click click click “Oh crap!”

“Way to go, now will you turn it off?”


So ended my optimism when it came to people leaving an organization.

Thanks to Matt (and some new experiences) I now take much greater precautions and expect the worst of every single termination I am a part of. Most of them go well but I don’t bet on it any more.

Originally published at on June 12, 2006.