Richard Rawson is the president of Insperity, an industry-leading HR services company based in Houston, Texas. With 60 offices and more than 2,200 corporate employees across the U.S., Insperity provides an array of HR solutions designed to help improve business performance. Founded in 1986, this year, Insperity celebrates 30 years in business.
I sat down with Richard to talk about HR challenges that businesses face today, including the new white collar exemption rule, along with lessons Insperity has learned in its three decades as an HR services provider.
How will the new white collar exemption rule update affect businesses?
The new rule is definitely going to increase cost and complexity for employers. As you know, Greg, the new rule increases the weekly salary required for an executive, administrative or professional employee whose job duties otherwise qualify the employee to be considered an exempt employee. If employers of exempt employees earning less than $913 per week choose not to raise the weekly salary to meet the new standard, their employees will, generally, have to track their hours. For example, hourly employees in California must be paid 1.5 times their regular rate of pay for any overtime work in excess of 8 hours per day up to 12 hours or 40 hours per week.
Business owners are really going to have to spend time evaluating their employee classifications. This is really, really important. This starts with evaluating current classifications of exempt employees in light of the salary test and the duties test. Although the duties test has not changed, now is a good time to ensure that all job descriptions and classifications appropriately reflect the current responsibilities of each job.
If an employee changes from exempt to nonexempt, a time tracking system will need to be in place. Businesses also need to be sure to review and update any wage-hour processes and policies as needed, including timekeeping for hourly employees. Additionally, if there are employees being reclassified, business owners also need a communication plan to explain the changes. This should include training for both reclassified employees and their managers.
In general, it’s a good time to revisit the rules and regulations around the Fair Labor Standards Act, and make any adjustments needed to remain in compliance. The fines and penalties for noncompliance can be really costly.
How do HR challenges change as a business grows?
HR starts out simple. You need payroll to pay your people. You have to figure out benefits. You have to get workers’ compensation coverage. Then you have to start building a set of policies and procedures that continue to grow as your business grows. For example, a PTO policy and an approval system for pay raises. And, as you grow and the laws change, you have to consistently apply these policies and procedures to all situations, otherwise, you open yourself up to liabilities and lawsuits.
Once you have those things in place, you need to move into the strategic part of HR. For example, compensation planning, which is designed to get the desired behaviors and results from your employees. But compensation systems shouldn’t be the same for all types of employees, so it becomes increasingly complicated as you grow. Your compensation plan has to be flexible enough so you can change it and get the desired results without destroying the motivation that it created.
And then you have things like compliance management, liability management and refining your policies and practices so that they demonstrate and accentuate the culture of the company that you want. That’s a big deal because every business has a culture. You can either create it, or it will create itself. If you want to have a business that attracts quality people who do the right thing – with good and honest morals and ethics – you have to create a culture and HR policies and practices around it.
Your culture starts with your mission statement and your values. If employees feel like they’re valuable and like what they’re doing, it affects their attitudes about coming to work. Once you have enthusiastic people, you can deliver incredible products and services to your customers. Good culture produces great performance by employees.
What lessons has Insperity learned in the course of 30 years as an HR services provider?
HR is constantly changing. The more states that a business is in, the more change is involved. With three different sets of rules and regulations for every state – rules for health and benefits insurance, workers’ compensation, and state employment laws – change is inevitable.
We’ve also learned that the investment in technology has become a massive component of what we have to do to deliver HR services. The value of having timely and accurate data is critical. There is no room for error.
Culture is also vitally important. While early on, in the 80s and 90s, culture wasn’t discussed specifically, we did establish a culture at Insperity that we’ve replicated across our locations nationwide. Our culture is built around a service mindset. It includes things like respecting the worth of the individual, doing the right thing, treating others as you’d like to be treated – those things are really key. As you grow and expand, you have to learn how to instill those values in your employees.
Employees spend a significant amount of their day at work, so it’s better to be in an environment that is conducive to feeling good. When you walk into an Insperity office in Houston, it looks and feels just like the office in San Francisco. We believe that when you have a commitment to continuity, it produces emotional stability in employees.
To learn more about IInsperity log onto: www.insperity.com.
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If you'd like to comment or have further questions for Richard (or me), I welcome you to post here (below), on Twitter -@GregJMorton (#CEOCorner) or on Linkedin.