Playing Russian Roulette

If you do not have someone in your organization responsible for your human capital management, regardless of size, then it is only a matter of when, not if, it will cost you valuable time and money. This could have been prevented.

According to statistics, 30% of all business failures are due to employee theft and related forms of dishonesty. The Bureau of Immigration and Customs Enforcement (ICE) within the Department of Homeland Security (DHS) has suddenly turned its focus inward, resulting in I-9 inspections and workplace raids on companies engaged in the construction, service and manufacturing industries.

“Raids carried out in 26 states on wood pallet and crate companies” and “ICE officials said agents made more than a thousand arrests in nearly 40 locations including Houston; Cincinnati; Phoenix and Albany” were just two recent headlines reflecting the Federal Government’s efforts regarding illegal immigrants.

Unintentional mistakes in the I-9 process can result in fines ranging from $250 to $10,000 and jail time. These figures will increase with the government’s renewed focus on immigration and compliance issues. Federal officials said they are taking a new approach. They will now focus on criminal cases against company of- ficials, rather than only seeking civil penalties which were viewed by some violators as the cost of doing business. Millions of dollars are paid in back wages and fines for misclassification of exempt vs. non-exempt workers. And the list of preventable human resource related minefields continues to grow.

The initial recruiting and interviewing process is a plethora of potential illegal and discriminatory practices. The number one source of new employees for a number of small and mediumsize businesses is from referrals. Although this can be an excellent source, the tendency is to shortcut the selection process resulting in lower quality employees and/or a poor fit that will actually cost your company money in terms of poor customer service, losses in productivity and negative impact to current employees who are “enduring” the new hire.

Other areas of concern relate to the application and interviewing process:

• Are your advertisements for new employees in compliance with the various federal and state laws relating to EEOC, ADA and others?
• Do you have a complete job description written not only outlining the skills, knowledge and abilities required, but the physical, mental and “soft skills” necessary to perform the function and is it ADA compliant?
• Are you or your staff asking potentially discriminatory questions during your interview process?
• Is your application legal and in compliance with the various federal and state regulatory issues?
• Are you verifying employment history and performing reference checks properly?
• Are you in compliance with the various federal record retention requirements with regard to the selection process?

Day one is critical for a new employee. Each new employee must fill out the employment related documents required by the company, as well as the required government forms to confirm they are legally authorized to work in the United States, Federal and State (if applicable) withholding forms.

The company also will want to provide the employee with any documents and policies that will govern his or her employment in the future. Documents that need to be provided include policy manuals, employee handbooks, safety manuals, confidentiality agreements, non-compete agreements, employee benefit plan descriptions and employment contracts (if applicable).

• Are the I-9 forms being properly and timely completed and kept separately from the other personnel records?
• Do you have an employee handbook that is current and in compliance relative to the size of your organization?
• Does your employee handbook cover prevention of harassment, discrimination and employment at will?
• Do your employees sign any type of verification that they understand your policies and procedures?
• Do you still use the term ‘probationary period’ for new hires?
• Do you have a procedure for handling claims of harassment and discrimination? Are they clearly communicated to your employees?

There are more than a dozen federal laws, statutes and regulations that affect the hiring process. The various state laws, statutes and regulations complicate the process further. The purpose of these laws is to ensure that all individuals are given an equal opportunity to be selected for a position, free from discrimination and harassment.

By not having a human resources trained individual involved in your hiring process, either in an employee or advisor role, your chances of “losing the lottery” are high and growing. Even when legal issues don’t arise, common human capital management mistakes can cost the organization in terms of lost productivity, efficiency, effectiveness, sales and revenues, and decreased profitability.

Employees are the only truly unique component of any organization and can either help it to grow and prosper, or fail and die. The investment in effective human resource practices and functions and professional advice can be as critical to the success of an organization as having the right equipment, materials, products and processes.