From: Inc. Magazine, August 2008 | By: Inc. Staff

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If you're like many entrepreneurs, you're too busy running your company to think about how to run it. So you create a vacation policy when an employee asks for time off and a dress code when someone arrives at the office wearing an inappropriate T-shirt. Sound familiar? If so, it's time to put your HR policies in writing.

For one thing, codifying policies in a handbook gives you a measure of legal protection in the event that an employee sues you for wrongful termination, harassment, or illegal discrimination. "A handbook isn't lawsuit-proof," says Elaine Tweedy, director of the University of Scranton Small Business Development Center in Pennsylvania. "But what the court system looks at first is your policy. And if it's not in writing, then you can't prove you have one." Of course, it's better if employees don't sue at all, and formal policies can help there, too, by generally encouraging fairness and consistency.

Plus, if you formulate your employment policies with a progressive, employee-friendly cast, they can be powerful tools for recruiting and maintaining morale. "The primary benefit of putting together a handbook is that the owner can design a work experience that he wants for himself and the people who work for him," says Rick Galbreath, president of Performance Growth Partners in Bloomington, Illinois.

The pages that follow will get you started. And once you put the policy down on paper, follow it. "If you don't," says Tweedy, "your employee has every right to sue you."

Related Content

• Put Your Policies in Writing
• Detailing Discipline
• Steal This Manual?

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AMCG is a unique organization because we concentrate on what's best for your company. Your employees are the live-blood of your company's success, and company benefits play a vital role. While AMCG can assist in improving your company's efficiency, we can also analyze your current HR program. AMCG's HR partners are HiRe Benefits and together we can assure that you are getting the maximum benefits for your employees.

HiRe Benefits was created after years observing the group employee benefits business. The observation was that very few agents and brokers bring true value to their clients beyond simple product/market access. We were determined to change that model. We created a firm focused on providing a comprehensive benefit solution, both in breadth and depth of services, to include strategic planning, consulting, brokerage, compliance and communication services as well as outsourced administration and enrollment solutions. We ensure that your business has explored all opportunities for efficiencies and cost control, not simply focusing on the obvious - healthcare premium increases -, but also focusing on the “hidden” costs of benefit programs; the complexitiesof administration, communication, compliance and long term planning.

At HiRe Benefits, we are not a sales organization selling insurance product, but rather a professional service organization offering our time and expertise. We utilize sophisticated, Internet-based applications that have saved other employers significant dollars on employee benefit costs, and these applications can help you too.

For more information on HiRe Benefits, please visit www.hirebenefits.com

Many business owners get so involved in their business world they put off their own financial planning. The time to plan for your personal future is now, before it's too late. The following posting is from AMCG partner Vince Clanton of The Chancellor Group:

What is the Process?

For many people, personal finances are the stuff of sleepless nights and gnawing daily stress. Imagine completely understanding all your options and knowing exactly what to do to achieve your goals. Planning can be a liberating experience and leave you with more time to enjoy your life to the fullest.

This process takes not only accurate information, but personal reflection and prioritization. The Chancellor Group, Inc. will take you step-by-step through a proven process of aligning your resources with your values to create a realistic, achievable plan.

Step One -    Prioritize and Agree on Life Goals
Step Two -    Gather Financial Information
Step Three - Analyze Current Financial Status
Step Four -   Develop a Specific Strategy to Achieve Your Goals
Step Five -    Implement the Plan
Step Six -     Monitor Success and Adjust (as life changes require)

The Chancellor Group, Inc. partners with you to delve into a wide range of questions, such as:

• How do you see your future?
• What is the current status of your income, savings, assets and debts?
• Are you and your family adequately protected against risk?
• How does your home equity and mortgage rate compare with the current value and market predictions for the future?
• What is your risk tolerance in the pursuit of reward?
• Do you have a will and estate plan?
• Have you considered issues related to long-term care?
• Are others depending on you? Do you need to provide for them now or in the future?
• Is philanthropy an important part of your life? Which charities are most important to you?
  

There are many other questions to explore in order to create a comprehensive financial plan for you. The Chancellor Group, Inc. then takes you that extra step by reviewing your progress, then adjusting your plan as your life changes to keep you on course to success. Completing this process can create a sense of personal empowerment, contentment and relief.

The Person With A Plan Wins.

For more information about The Chancellor Group, please visit www.thechancellorgroup.net

Employee turnover can be a killer. With the current downturn in the economy it is very important that you keep your key employees. The high cost of employee turnover is something that is usually overlooked. The reason for this is most businesses don’t consider all the costs involved in losing an employee and rehiring another. In addition to direct cost, such as advertising, there are also soft costs involved, which is lost business due to  the turnover. How much lost productivity does your business experience during this time? Can you determine an accurate cost of the lost business you experience during the turnover period?

A few years ago Nike estimated that its turnover cost for one associate was $15,000. Hewlett-Packard estimated that their turnover cost was $7,000 to $10,000 per employee. Let’s consider some of the cost involved when you lose an employee and have to replace them:

Hard costs
Exit interview
Payroll processing
 Temporary worker fill-in
Co-worker overtime
Advertising
Interviewing three candidates to select one
Drug and background testing
Reference checking
On the job training
Informal literature
Supervisor’s administration

Soft costs
Lost productivity of incumbent
Lost productivity of co-workers
Lost productivity of supervisor
Lost productivity during learning curve
Current business lost
New business not acquired
Turnover resulting from turnover

Management and employee training is critical to assure you have the right people in place. A business consultant specializing in employee development can help train your managers to place the right people in the right job. Allowances in your business plan should include management and employee training for ongoing development of your staff. Keeping your key employees has never been more important that it is today.

Superior customer service has become the key ingredient for success in virtually all businesses and industries. Competition, especially now during the current economic downturn, is extremely high giving the consumer many options before choosing to do business. True customer service means doing "ordinary things extraordinarily well."

Companies that put customer service at the front of their business charge about 9% more for their goods and services. They also grow twice as fast and they pick up market share at 6% per year, while those with poor customer service loose 2% per year.

The service stars earned a 12% return on sales, vs. a paltry 1% for the rest. Employee management training programs will reinforce and train your staff on the importance of customer service.

Arriving at the most favorable price for your goods and services can be a difficult task. You first must be aware of the intricate relationship among price, cost and volume. In establishing selling price, you should aim to achieve the maximum volume, with the maximum price and at minimum cost. Three factors that are most influential in establishing pricing policies: customers, competition and costs.

Customers – The sales of any product or service are dictated by the principle of supply and demand. Although you exercise a certain degree of control over supply, the customer determines the demand. To influence demand you must cater to the customer’s whims and desires.

Competition – The status of your competition also is of extreme importance in establishing a selling price. Are you a leader in the field who can dictate prices, or are your pricing policies dedicated by some other industry leader?

Costs – They are the first component of your selling price.
1. Variable (direct) costs vary with the volume of the business. The total variable cost is directly related to the quantities produced. If you do more business, then the cost of labor and materials used will increase.

2. Fixed (indirect) costs remain unchanged regardless of how much business you do. Price examples of fixed costs is rent and personnel salaries.

Management training can assist you in developing the correct selling price for your goods and services. Remember, you don't always have to sell on price alone. Your professionalism and expertise should also be part of your overall selling price strategy.

Ratios are used to analyze and interpret a company's financial statements and its operating performance. They are best used as a measure of trends in the company's activities. Ratios are rarely meaningful alone. Rather, they are used to support or contradict other data and must be compared (1) against an external yardstick, such as another company or an industry average; or (2) with data for past and/or projections for future years to establish trends. You then can determine whether things are getting better or worse in a particular way, according to the ratio used. Ratio analysis can assist in making sure your business plan is on target.

General Ratios

Net worth – often called book value, net assets, capital, owner’s equity or proprietorship equity. It is the excess of total assets over total liabilities.

Return on investment (ROI) – measurement of the yield (rate of return) that the shareholders are receiving on their investment. Profit after taxes (PAT) over net worth.

Return on invested equity (ROIE) – can be a more meaningful ratio than ROI because it takes into account any retained earning deficits. Profit after taxes (PAT) over net worth before deducting invested capital.

Return on total assets (ROA) – often is useful when applied to different division or product lines of a company, as it reflects money tied up, particularly in inventory. This allows comparisons of the company’s ability to generate profits from its various activities. Profit after taxes (PAT) over total tangible assets.
Note: the total assets exclude intangibles such as goodwill and deferred charges.

Leverage – indicates the degree to which the business is financed by creditors rather than the owners. Too-high leverage could leave the company vulnerable in a period of temporary decline. Total assets over net worth.

Debt to equity – another way to look at the relative investment of creditors and owners. The lower the ratio, the more money in relation to debt the owner has in the company and the safer the creditor. Total debt (current liabilities plus long-term debt) over net worth.

No matter what business or industry you are in, you need to focus on hiring and training exceptional people if you want to become an outstanding business. It is important that you provide an atmosphere that rewards initiative. By allowing your employees to use their initiative, they will do what needs to be done without having to be asked. These high achievers will make things happen and get the job done. Your employees are the driving force behind the wheel of innovation. It is their initiative that starts the wheel in motion. It is their energy , enthusiasm and commitment that keeps the wheel turning. Business consultants can be brought in to provide employee management training to assist in the further development of your current staff, or to train your staff to assist in the hiring of new employees. Employee management training can support these initiatives.

Why people don’t take initiative

1.       Lack of confidence

2.       Lack of skills

3.       Lack of support

4.       Lack of reward

The essential steps for cultivating initiative

1.       Hire initiators

2.       It’s easier to start with someone with demonstrated ability

3.       Accept and evaluate applications for employment regularly

4.       Interview using “behavioral questions”

As the owner or manager of a business, or someone about to start one, you may not have considered the importance of planning for your business. Planning is more important for the survival of a small business than for a large one. A small business can’t afford to waste its energies and resources. A serious mistake not recognized and corrected quickly, can mean bankruptcy. Most business owners begin with strengths in one or two significant areas, most often production and sales but with some definite weaknesses too. Finance is another area where businesses get into trouble; however, most business failures are not due to financial reasons, but poor judgment. Therefore, it is important that you develop a solid business plan. Many businesses rely on a business consultant to prepare a plan, or review your company's existing business plan.

 

When business planning is necessary

1.       You just purchased an existing business and you know you have to make some changes to succeed. This is when a business plan is needed.

2.       Your business has been doing well, but it seems to have reached a plateau. Now you want to expand. A review of your business plan would be beneficial at this point.

3.       You’ve been in business for five years or more and you wonder how to stop working so hard. You can’t seem to find time for yourself or take a vacation. Once again, a review of your existing business plan is in order.

Nine small business management pitfalls
Dun and Bradstreet has compiled a list of nine major pitfalls indentified by owners of businesses in a nationwide survey.

1.       Lack of experience – What is needed is not experience alone, but balanced experience; knowing what stock to buy, how to attract customers, how to handle money.

2.       Lack of money – Lack of adequate start-up capital was identified as the second worst pitfall.

3.       Choosing the wrong location – Location, location, location.

4.       Mismanagement of inventory – Start-up funds are limited, too much inventory is a mistake, but too little stock or too limited a range of profits can hurt you too.

5.       Too large an investment in capital equipment – The money you put into equipment, fixtures, and real property is likely to be borrowed money. If not, it comes out off your working capital – the money you need to keep going.

6.       Poor credit granting practices – Before you allow customers to buy on credit, make sure your cash flow will not be adversely affected and make sure you have the skills and the tenacity to collect what is owed you.

7.       Drawing too much out for yourself – How long can you hold out without a salary? Drawing too much out for yourself can jeopardize your whole investment.

8.       Unplanned expansion – Should you open a branch? Hire more help? Enlarge your premise? Growth by addition or expansion should be carefully planned. Gaining too many customers too fast can be as harmful as not having enough.

9.       Having the wrong attitude – If you own your own business, you must expect long hours, hard work, and little pay in the beginning. If you resent these conditions, you shouldn’t be in business.

When communicating properly with people it is important to understand that personal space is the distance that feels comfortable between you and another person. If another person approaches you and invades your personal space, you automatically move back without a thought. Therefore, when dealing with people:

·         If another person moves away from you, they may be creating more space for themselves

·         If this is the case, keep your distance

The three distinct spacing zones:

(1)    Intimate – reserved for romantic partners, family members, close friends and children

(2)    Personal – (2 to 4 feet) most of our conversations with people take place in this range

(3)    Social – (4 feet or more) mainly used by teachers, bosses conducting company meetings, etc. Remember, while it is not good to crowd people, you can also get too far away.

Use the following ten questions to see if you are delivering customer service. Add the scores together and then look at the table below and see how you scored:

Questionnaire
0 = Rarely
1 = Sometimes
2 = Often
3 = Almost always

____ When having a conversation with a customer I give my complete attention avoiding doing other tasks. 

____ Do I make eye contact when speaking to a customer to show that I am paying attention?

____ When speaking to a customer over the phone, do I make an effort to use infliction in my voice to convey interest?

____ Do I pick up the telephone by the third ring?

____ When I need to put a customer on hold, do I ask permission to do so and wait for a response?

____ Do I avoid technical jargon and use language that the customer can understand?

____ When I cannot provide my customer with what they want, do I suggest options and alternatives?

____ Do I sincerely apologize to the customer when a mistake is made by me or my company?

____ When a customer is voicing a complaint, do I remain calm and understanding – even when I think they are wrong?

____ Do I view customer complaints as an opportunity to improve service, or a problem taking up valuable time?

____ Total Score

0-12 points = Bronze level service (newcomer to customer service and still learning)
13-22 points = Silver level service (solid understanding, but not using them consistently)
23-30 points = Gold level service (congratulations, you are a professional at service)

Economic rewards such as pay is not always the best factor for increasing employee morale. As a matter of fact, salary comes in below the middle of the pack when it comes to the keys that most influence moral. Here are the key factors that influence morale (in order):

1.       Job security

2.       Interest in the work

3.       Opportunity for advancement

4.       Appreciation and recognition

5.       Feelings about the company and management

6.       Intrinsic aspects of job assignment

7.       Salaries

8.       Supervision

9.       Social aspects of the job

10.   Working conditions, including benefits

As you can see, salaries come in at number seven out of ten factors. Therefore, remember that employees want to feel they are part of the team, and they are appreciated for what they do. Security is the most important factor. Keeping good employees is critical to the success of any business. Make sure your employees know exactly what is expected of them. Make work interesting and meaningful, and always remember that loyalty cuts both ways. If you value your employees they will become the best asset your business has.

Business activities, including but not exclusive, or promotion and sales that get your product out to the consumer. Nowhere is planning more important than in marketing. Marketing is the whole process of having the right product or service, at the right time, in the right place, calling attention to it and thereby bringing a mutual benefit to the customer.

The most common marketing traps

·         Failing to consider the customer’s needs

·         Failing to appraise the marketplace for real numbers of potential customers

·         Failing to interview customers and ask their honest opinion of your product or service

·         Failing to appreciate the size and effectiveness of the competition

·         Failing to notice market trends that lead to a reduction in business

Positioning your market properly

·         Not everyone is your potential customer. Don’t make the mistake of thinking that all people in your area will buy from you.

·         Find you niche

·         Understand your customer’s wants and needs

·         Who is your target market?

·         Create new wants and needs not being supplied by the competition

·         Use demographic statistics, such as age, income, occupation, mobility, and so on

Who is your completion?

·         What are their strengths and weaknesses

·         How does your business differ from theirs?

·         Why should customers do business with you and not theirs?

·         Don’t try to go head-to-head with the market leader

·         Attack the weaknesses of the leader’s strength

·         Separate yourself from the competition

·         Don’t knock the competition

Did you know that one of the biggest killers of business is customer dissatisfaction? On average a customer with a problem will tell 9 to 10 people about it. One in five will tell more than 20 people! No company needs this kind of word-of-mouth negativism.

For customers who have complained to an organization and had their complaints satisfactorily resolved go on to tell an average of five people about the treatment they received. It is always cheaper to keep your existing customer than it is to go out and find another to replace them.

Therefore, be happy about customers who take the time to complain. It gives you a second chance to keep their business. Most of the time when a problem is resolved, the bond between the business and the customer becomes stronger.

In the future, don't run away from problems, run toward them. In an imperfect world, problems will come up, but treat them as an opportunity, not an obligation. When you're at the end of your rope and things are going badly, just remember, that a business without problem customers is a business without opportunity.

Use the following ten questions to see if your company is delivering customer service. Add the scores together and then look at the table below and see how you scored:

Questionnaire
0 = Not at all
1 = To a small degree
2 = To a moderate degree
3 = To a large degree

___ Do we survey our customers to see how satisfied they are with our products/services?

___ Do we survey our staff to find out how satisfied they are with the working environment?

___ Do we have specific goals that focus on providing quality products and customer service?

___ Do we collect information on what poor quality and service is costing our company?

___ Do we train our front-line staff in telephone and face-to-face customer relations skills?

___ Do we train our managers in the skills needed to provide excellent service?

___ Are new employees put through an orientation process that stresses the importance of 
      customer service?

___ Do we have a computer system that supports our staff providing efficient service?

___ Do we have a process in place to make corrections based on customer feedback?

___ Do we go out of our way to reward and recognize staff for their efforts on behalf of the 
      customer?

___ TOTAL SCORE

0-9 points: Bean Counting (Customer service is a low priority)
10-17 points: Poster hanger (Know importance but not ongoing process)
18-24 points: Tiger by the tail (Good work, don’t stop now)
25-30 points: Bulls eye! (Congratulations)