Having your HR house in order is key to risk management

July 3, 2020

Clear and complete HR tools and policies can alleviate costly risks to your business and make your company more attractive to funders and investors. But many start-ups and small companies don’t have the time or expertise to contend with human resource issues.

We talked to NPC Innovation Support Member Jennifer Schab from PEO Canada about the importance of putting HR support in place for your growing business in general, and why it matters more than ever during COVID-19.

Jenniefer Schab, PEO Canada

Why is it important to have solid HR, even in a smaller company?

A company is made up of people, and you need systems, policies, procedures, and guidelines for recruiting, hiring, paying, managing, offering benefits to, and even terminating those employees. If you don’t, you open yourself up to legal and financial risks that could have a devastating impact on not just your company’s growth, but its very survival.

HR affects everything about your business. You want to focus on growth, not administration. For example, not having time to research comparable roles or appropriate compensation packages might mean you have difficulty filling a key role or worse, you hire the wrong person and have to start again at a critical time in your business’s evolution. This costs time, money, and unnecessary stress.

Why should start-ups and small companies be thinking about HR right now?

It’s critical to have a COVID-19 policy in place that covers issues around working from home, sick time, and return to work protocols. Having solid performance management tools in place can help you tackle emerging problems, including employees who don’t want to or can’t return to the workplace.

Then there’s workforce adjustment and termination. Nobody likes to talk about this, but it’s important to be prepared: How do you decide whether to terminate or lay off employees? How does severance pay and seniority affect those decisions? Do the government wage subsidy or other support programs allow you any flexibility?

Employee legislation is changing on almost a weekly basis right now. Numerous legislative changes, such as governmental and public health orders and the introduction of new leaves of absence rules, have triggered uncertainty. We educate, advise, and support our clients through these changes to ensure their policies and practices are compliant in every province they operate in.

What are some of the big “people” challenges facing start-ups and small companies?

Founders and entrepreneurs are smart people with big ideas, but they may not even realize there are issues that need to be dealt with in order to fully set up their business for success. One example is a smaller business coming to us to say they’ve qualified for seed funding or venture capital, they’re going to market, and they have to hire a sales team. But there are a number of important questions they need to answer first.

First, there’s recruiting. What do you need to attract and retain top talent suitable to the roles and to fit your company culture? What does an adequate benefits plan look like in this market and have you done a compensation analysis for that position and industry?

Second, you need to look at your employee documentation. You have to make sure all elements of the employment agreement are discussed with the new employee, understood, and signed off on. Once an employee starts, you could be at risk if things are not clear and a letter of offer is not yet signed.

Third, consider compliance. It’s important to have proper guidance surrounding legislation specific to payroll, RRSP contributions, and Worker’s Compensation in each of the provinces you operate in. For example, the vast majority of Canadian employers are required to maintain WCB workplace injury insurance. Failure to comply can be a huge financial liability with the potential to derail your growth before it even gets started.

What are the benefits of hiring a professional employer organization like PEO Canada to handle your HR needs?

Business owners need to be out front generating revenue, not bogged down by administration, so we support them in all aspects of their growth strategy by eliminating a whole set of worries. You don’t know what you don’t know. A simple mistake in calculating payroll remittances, for example, could be very costly and have a huge impact on your cash flow just when you need it most.

We assign a team of professionals to your file, including an implementation/onboarding team, payroll person, HR expert, and others. We’re not just a 1-800 number—we’re your HR department, and we want to be a partner, not just a service. We can even do a no-charge gap analysis to help you understand what’s missing from your HR picture.

A service like ours looks after all year-end calculations, government burdens, reconciliation, T4s, and has an employee web portal for pay stubs and other documentation. It can also manage data around time and attendance and eliminate the need for multiple software platforms. It’s nice when these systems talk to each other!

Any final words of advice?

My main message is this: HR is not something you should do by the seat of your pants. Meeting your obligations as an employer is not a luxury—it’s a necessity—not just because taking good care of your employees is the right thing to do, but because failure to comply with employment laws and regulations could put everything you’ve worked so hard for at risk.

It’s worth considering the ROI in your HR capacity. Maybe that’s in-house, maybe it’s an independent consultant, and maybe it’s a full-service firm like us. As long as you’re managing your risk as you grow, success will follow. Recognize that what you need tomorrow might look very different from what you need today—and you have to plan for that, not just let it happen to you.

Jennifer Schab is a Business Development Consultant with PEO Canada, a professional employer organization headquartered in Calgary, Alberta offering cross-Canada integrated HR outsourcing services to businesses and helping reduce employer risks. As a former sales rep for Metagenics, Jennifer has a special interest in helping natural products companies grow.