For years, key managers at Collision Care had divided up human resources (HR) responsibilities, from overseeing vacation time to answering employees’ questions about the company’s 401(k) plan and benefits. The controller served as the HR point person. But growth over the years Collision Care now operates eight locations with 120 employees has created a more complex HR picture.
“When you’re smaller, you can juggle the responsibilities, but [as you grow], the company winds up being exposed to serious liabilities without a full-time HR manager,” says Lou Berman, vice president of sales for the Philadelphia, Pa.-based company.
Employees need access to a corporate representative who can answer all questions related to HR in a timely manner, Berman says. Giving employees a single-source contact ensures that Collision Care’s people can fully take advantage of the benefits and culture the company offers.
“There is limited time when employees can break away from their production duties to contact us to talk about issues that are of real importance to them, whether it be family and medical insurance or their 401(k) plan,” Berman says. “From that perspective alone, we feel it’s important to hire an HR person full-time so employees get the access they deserve.”
Offering solid systems in the form of HR and general options is actually a hiring and retention tool, Berman points out.
“You want to hand employees something tangible that they and their families can refer to that shows what your company has to offer,” he says.
Collision Care is currently in the process of hiring its first full-time HR manager a central contact for employees and an issue spotter who will help the business stay compliant and avoid legal exposure. This comes following years of solidifying its employee manual and training, a priority for the company, Berman says.
Hiring a dedicated HR person is a significant milestone for growing MSOs, and an important step toward maintaining consistency across operations two of the greatest challenges that MSOs face during expansion. A third is integrating employees from an acquired location into the company culture, says Marcy Tieger of Symphony Advisors in Irvine, Calif. In fact, proper HR practices are important for shops of any size, with a single location or shops in multiple states.
“When there are not policies and practices that are clearly stated in writing, and in a central location, there is the risk of each location doing things differently, which can create some [legal] exposure for the company,” Tieger says.
Consistency, across the board, is the key to maintaining an effective, compliant HR practice that grows along with the company.
Get It On Paper
What’s the vacation time policy? How does the business handle sick days? What benefits does the company provide, and how does the 401(k) program work? These are HR questions employees can ask, and depending on who fields the question, the answers could be very different. That’s never a good thing.
“You have to treat everyone the same, and without a manual to go by, that can be difficult,” says Bob Juniper, president, Three-C Body Shops Inc., Columbus, Ohio.
The problem is that many growing MSOs have pieces-parts of an employee manual, but not one polished document that has been carefully reviewed for legal compliance.
“Sometimes, there’s a failure to bring all the threads together as a business grows,” Tieger says.
As companies grow from one to two or more locations, the need for standard operating procedures and HR policies is even greater because of increased exposure.
“A single location might not have to put a lot of its policies in writing, then as they grow, ad hoc, they start adding sections to a manual,” Tieger says. “Before they know it, they have a hodgepodge, and the manual becomes the last thing they take care of because they’re growing and not thinking about this [policy] infrastructure.”
A concise, professional policy manual can ensure that employees are treated the same, Juniper emphasizes. “Everyone wants to be treated fairly,” he says simply.
An employee manual is also critical when integrating employees following an acquisition. It spells out the company’s benefits and how it operates. When running multiple locations, a manual ensures that key word: consistency.
“What you don’t want is a situation where one location has been told, ‘This is the policy,’ then talking to employees at the other location, they say, ‘This is not the way we do it here,’” Tieger says.
This scenario is particularly prevalent following an acquisition when employees fail to integrate into the company. However, with formal policies laid out in an employee manual, staff will see the company’s expectations and decide if they want to continue their employment there.
Juniper has learned that having policies on paper is valuable for retaining quality workers and letting go those who are not willing to work up to the company’s standards. He recalls the exist turnstile that occurred following one acquisition.
“We lost all of the people over a period of six to eight months, and that was because we did things so differently than what the shop owner did before,” he says.
The fall-out was not negative for Three-C because the company communicated its standards, and those employees who did not want to integrate into the corporate culture simply moved on. Because the policies were on paper, there was no question about whether the new employees were being treated unfairly. They could either choose to adhere to a progressive, professional culture or go their own way.
Juniper says Three-C worked to integrate these new employees into its culture.
“But we were raising the bar,” he says of the company’s policies and practices. Those who wanted to work “the old way” moved on.
Tieger says an acquisition generally means richer benefits for employees who continue with the company. It’s important for companies to properly communicate and execute benefits and HR policies. How will it transition accrued benefits, such as vacation time?
“There needs to be an orientation explaining the benefits to staying on,” Tieger says. “And, the company needs to be able to convey the benefits of the business culture and the actual nuts and bolts of what employment looks like.”
Hiring an HR Pro » Pulling together “the threads,” as Tieger says, can be a real challenge for growing MSOs. Over time, HR becomes a significant role with increased risk exposure if not properly managed. At a certain point, MSOs face a decision: Should we hire a dedicated HR person?
There is not a company size quota as in, hire a full-time HR person when the employee roster reaches 60, 70 or 100 people. But there are certainly triggers that indicate the right time to hire on an HR professional and, Tieger suggests, one with experience working with multiple branches or businesses as opposed to a single operation.
At Collision Care, the tipping point of when to hire a full-time HR person was when managers recognized that they could not be as responsive to employees’ HR questions and concerns as expected. At Three-C, Juniper’s wife joined the team as the dedicated HR professional having past experience in the retail industry when the company grew to two locations and about 40 employees. Now, Three-C has four locations and 48 employees.
Having a full-time HR manager ensures that employees have a venue for airing concerns, Juniper adds.
“If you want to retain good people, you have to give them a chance to open up in a comfortable situation,” he says.
When hiring an HR professional, an MSO should consider whether the professional has experience working with multiple locations, Tieger says. And, if the company has locations in various states, the HR person’s knowledge base must span the company’s geography.
Meanwhile, Juniper contends that Three-C has minimized HR issues over the years by adopting solid business systems that leave less room for error. For example, when the company began to grow quickly and found less time to properly screen candidates for hire, he says HR became stressed because of consequences from hiring the wrong people. Employee screening is an important role that falls under the HR realm.
Even pay structure affects the HR equilibrium. Three-C opts to pay hourly and salary wage (flat rate) vs. commission.
“I found we have much more of a team effort this way,” he says. Again, this speaks to fairness and avoiding employee animosity and the HR issues that can ensue.
“What I have learned after all these years is that how you run the business really affects that HR tremendously,” Juniper sums up.
Berman’s advice: “If you have intentions of expanding, start building an employee manual now,” he says. “Have a working script as you go along so when you’re ready to hand off those HR responsibilities to someone else, the book is already written.”
4 Signs You’re Ready to Hire an HR Pro
1. Difficulty hiring talent fast enough, or integrating employees from acquisitions. An HR professional can provide effective recruiting, training and development systems.
2. Legal risk due to workers’ compensation, wrongful termination lawsuits, pay inequity, sexual harassment claims, etc. An experienced HR manager will work as a risk spotter, and implement policies that mitigate the potential for exposure.
3.Policies and procedures that do not support growth. An HR professional will evaluate existing policies, determine where there are gaps that expose a company to risk, and assemble a comprehensive document that serves personnel and legal purposes.
4. Excessive spending on outside human resource services. How much are you paying the HR consultant? Is it time to bring on a full-time employee who will be dedicated to your company and align HR systems with your business strategies?
Kristen Hampshire is a freelance writer based in Cleveland, Ohio.