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In today's tight financial and labor
markets, the ability to secure and retain valuable management
resources is one of the most important financial challenges
a multi-unit owner will face. It may be argued that people
are more valuable assets than the franchise itself because
the franchise is worth nothing without its employees.
In choosing whether or not to make an investment, investors
are looking closely at a company's management team to
see whether an experienced, solid team is in place.
In light of the importance of human
resources, this article will discuss human asset management.
We view human asset management as a continuum. This continuum
is illustrated in the following chart:
Once an employer finds the right person
to hire, the process of hiring becomes very important.
The hiring process is the first element of the human
asset management continuum. An employer must ensure the
newly hired person remains a valuable asset. Consider
the following checklist when hiring a new employee: · Does
the employee clearly understand his or her employment
contract?
· Does the employee feel he
or she has received appropriate incentives?
· Has the employee been provided
with a clear understanding of his or her termination
rights?
· Do you, as an employer, understand
the local laws and the costs associated with hiring and
terminating each employee (whether the employment is terminated:
(i) with cause; (ii) without cause; or (iii) by retirement).
The next major component in the employment
continuum is an ongoing responsibility to each employee.
A multi-unit operator must have in place the appropriate
span of controls to be able to effectively communicate
change in the business, authority, job modification and
job description to the employees.
Another major area along the continuum
is ongoing employee benefits and incentives. Each employee
is an asset that needs to be protected and provided for
under his or her employment benefits. In addition to
cash compensation, these benefits include 401Ks, non-qualifying
incentive plans, cafeteria plans (such as medical reimbursement),
ownership participation (actual or phantom), or the rights
of the employee to have his or her name on the franchise
agreement. Many of these items involve governmental compliance,
such as ERISA issues. Other benefits are merely contractual
obligations between the employer and employee.
Management of the employee's performance
is another aspect of the continuum. Management involves
constant review, documentation of the employee's performance,
counseling (where appropriate), and adjusting various
aspects of the employee's compensation and benefits.
The multi-unit operator's human resource department needs
to be familiar with current employment laws and maintain
up-to-date files.
The human resources department needs
to pay particular concern to the employee's compliance
with discrimination and harassment laws and policies.
This is an area in which very significant liability can
attach to the employer. By proper management of employees
and by the creation and adherence to appropriate policies,
employers will limit or even eliminate their legal liability.
It is imperative that companies have a clear policy of
zero tolerance of sexual harassment or discrimination.
That policy must be clearly conveyed to all employees,
and it must provide an appropriate person for employees
to contact with their complaints.
The final and most difficult aspect
of the employment continuum is terminating the employee.
There are various forms of employee termination: (a)
at will termination; (b) termination due to a violation
of a specific clause in an employment contract; (c) retirement;
or (d) voluntary termination by the employee.
Obviously, there are many legal constraints
and issues regarding employee termination. The employee
being terminated is now in one of life's most stressful
situations. Understand and treat the employee with respect.
Someone (probably from the human resources department)
should explain to the employee his or her termination
rights clearly and completely. Treating a departing employee
fairly is more than an issue of ethics; it's just plain
good business and will save the employer countless problems.
An attorney should be consulted with a difficult employee
termination issue.
Keeping the entire continuum of human
asset management in mind, look at each new hire and key
management person as a valuable human and financial asset
of the company. Multi-unit operators should manage their
human assets with the same kind of futuristic view used
to manage their financial and physical assets.
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