Sabrina Serafin, Partner and National Practice Leader of Frazier & Deeter’s Process, Risk and Governance Practice talks with Matt Ficken an advisor with Insperity about the importance of HR compliance no matter the size of the business.
Insperity is a service provider specializing in human resource solutions.
Culture of Compliance is available on iTunes, Google Play Music and Spotify. Listen now using the player below or download for later.
Managing Your HR Compliance with Insperity Transcript
This transcript was assembled by hand and may contain some errors.
It has been edited for readability.
Sabrina: Welcome to Frazier & Deeter’s Culture of Compliance podcast series, where we discuss compliance as a competitive advantage in today’s marketplace. I’m Sabrina Serafin, Partner and National Leader of Frazier & Deeter’s Process, Risk & Governance practice. Today, we’re talking to Matt Ficken, an advisor with Insperity, a service provider specializing in Human Resource Solutions. Matt, welcome.
Matt: Thanks for having me, appreciate it.
Sabrina: Why don’t we start off with a bit of background about Insperity?
Matt: Absolutely. Insperity is a professional employer organization outsourcing HR activities for small and medium-sized business owners, really providing a lot of net profit protection in the compliance arena by ensuring that the small and medium-sized businesses are in full compliance.
Sabrina: So tell us, what human resource compliance activities should a company be cognizant of as they establish themselves?
Matt: When you’re first starting your company your mind is really focused on your operations, your product or your service. How are you going to make ends meet until you sell your first deal, etc. So, it can be easy to look past a lot of the basics that are really so key to being compliant. And that’s why it’s important to have an attorney to ensure you’re incorporated and file with the state and federal governments correctly.
It’s also really important that you’ve spoken to a CPA as it pertains to HR, making sure that your withholdings for your employees’ paychecks is done correctly. Also make sure your taxes are all in order and everything like that. And another one is very simple to me, is looking into getting worker’s compensation insurance, and there’s a ton more that you need to address. But this, especially as you add employees, becomes a bigger and bigger concern. But those are a few kind of rudimentary things I would say as you’re in that establishing phase in the marketplace you need to look at.
Sabrina: So, let’s talk specifically about outsourcing the HR function – it sounds like it can be essential to small or medium-sized businesses. Does it help with continuing to scale?
Matt: Oh absolutely. And not even just outsourcing HR, but outsourcing in general is so vital for a small to medium-sized business, for the SMB. When you’re in that stage of the game you are trying to do the best that you can to stand out from all the noise that your competitors are making. And that’s why you’ve really got to focus on delivering the best support service and/or product that you possibly can. But you can’t be focused on that on your core competency if you’re always having to, as my boss would say, “check your six,” especially around compliance and HR issues like we’re talking about here today. Your biggest competitors, they have the deep pockets to address these various operational silos of running a business. Marketing, legal, sales, finance.
So, if you can borrow someone else’s enterprise level and, in this case, HR team for accounting or legal or sales team, then you’re able to better focus on delivering quality. But the second part of that question, how does that help you scale, that affords the SMB owner, that small- or medium-size business owner that kind of corporate confidence they need as they grow. They know that, in this example, their HR department and their service is found there and are really on par with their enterprise level competitors. Most likely, then you’re going to be heads and shoulders above the folks that are the same size as you. And that allows you to attract talent and grow from there.
Sabrina: So, for those who aren’t familiar, can you tell us what “check your six” may refer to?
Matt: Absolutely. That’s more of an idiom. Checking your six is just making sure you look behind you and check your back and make sure pertains to compliance, all your ducks are in a row, and you’re not going to fall prey to legal or regulatory issues.
Sabrina: So, let’s talk about solutions. Specifically, what are some examples where you’ve seen simple compliance issues that businesses can easily avoid.
Matt: Honestly, it really is appalling to me how many small businesses don’t have workers comp insurance. I tell people, “No matter what you decide to do in terms of outsourcing your HR, you have got to get worker’s comp ASAP.” And I’ll even refer them to a broker. I’ll get them in touch with somebody. That’s a small thing, easily avoidable. I also run into a number of issues in regards to, when you’re offering benefits to employees, who has access to which benefits? A small example is where certain offices of the same company get different benefits, and it didn’t necessarily mean one had better or worse benefits, per se, but they’re different.
And that kind of thing, though it may not seem like a huge deal to a business owner, could very easily lead to a discrimination lawsuit. Business owners, you would be surprised at just how easily they can fall out of compliance and then how badly that could affect your business. Things like job descriptions, the Affordable Care Act, safety, having the signs posted in the break room. Having a PTO policy. I mean, the list really goes on and on where you can get in trouble if you’re not careful, and as soon as it happens, then you feel the pain all at once, and you really understand, “I really wish I’d been in compliance this whole time.”
Sabrina: Well, the theme of our podcast continues to focus on compliance activities as a competitive advantage. How do HR compliance activities achieve that?
Matt: Being compliant in HR, that means that you’re providing net profit protection for your business, so you’re ensuring that what you and your team have built into your business can’t be taken away from you. Whether that be a litigious former employee, the government, even a customer. This is a highly competitive marketplace, and not being compliant is, honestly, it’s a stupid way to risk it all, and I mean most business owners that I work with, they are those mavericks, those risk takers, just by their very nature; it’s who they are as entrepreneurs. But I would encourage your listeners to take smart risks elsewhere with their business, not in these very, very addressable areas.
Another consideration is that ensuring you’re HR compliant. That means you’re actively investing in what makes your company valuable: your people. I’ve worked with several, but one business broker in particular who sends clients my way when they’re trying to sell their businesses, and they’re having major people problems. I talk to these CEOs about what makes their business worth its valuation, and I get a lot of funny answers. I’ll get, “Well, I make my business worth its valuation,” or “My assets,” or this, that and the other. But, eventually we’ll lead them down the path of this idea, this notion that their employees are what make their business run, and so it’s a it’s a smart investment in your organization to invest in your people because ultimately, the theme of the day, that is an investment in your business.
Sabrina: Great, great answer. You and I have talked about security awareness training. What’s been your experience, and what kind of feedback are you receiving? Is it actually making a difference?
Matt: Security awareness training is definitely becoming more and more prevalent in conversations that I’m having. I’m somewhat limited with it in terms of some of the other areas of HR, but I have seen some things more specific to, I know a few security testing companies, when they tell me some of these stories, I mean, it really would make your head spin. None of these are any of my clients or anything, but I have heard of the security awareness testing firms and let me just quickly say their job is to try to get their clients, their employees to misstep. They’re trying to do this, but they’ve been able to convince employees to give up personal information about their clients or even look small things like they’ll allow a stranger to use their key card to access what’s supposed to be a restricted part of the building. But when people start testing for it, they realize that they have these glaring security awareness issues.
And again, investing in that is just another area where investing in your people is a direct investment in your bottom line and mitigating a lot of risk. I think the security training can be quite effective, honestly, especially against making poor decisions like what attachments open in your inbox. And again, who can you let in and out the door that kind of thing. Once your employees know, once they’ve been told what’s a good and bad practice, they then know. It’s pretty cut and dry. So, I think it’s effective and it’s a good conversation to be having with business owners.
Sabrina: I appreciate that, because we do constantly communicate to our clients and the community that security awareness training is the least expensive but one of the most effective ways to manage compliance and I appreciate you backing us up on that.
Matt, I want to thank you for joining us today. You’ve certainly given our listeners some interesting insights about an important aspect of any business. For our audience, thank you for listening to Frazier & Deeter’s Culture of Compliance podcast. Please join us for our next episode as we continue to discuss transforming various compliance requirements into investments in your business.