The Balance Sheet Approach to Human Resources
Companies routinely determine their financial status by reviewing income statements and
balance sheets that list a company's assets and liabilities. This analysis misses the
human resources perspective and can ignore a company's greatest asset: fairly treated
employees. Unfortunately the reverse can also be true, for if not treated fairly or
with respect, disgruntled employees can be an organization's biggest liability.
At Human Resources Strategies, Inc., our job is to help you maximize your employee
assets while minimizing your employee liabilities. We do this through the development
of human resources programs, policies and practices that focus on the 4Cs:
Compliance, Consistency, Competitiveness, Creativity.
Our first task is to minimize liabilities by ensuring our clients comply with all
federal and state HR requirements. For example:
- Do you have the correct state and federal postings clearly displayed?
- Are your employees correctly classified as exempt or non-exempt? Are you
familiar with the differences between the federal and state definitions?
- What is in the employee file, and should it be there?
- What questions can you ask during the interview process and what do you need to avoid?
- Are you administering your various programs in compliance with mandated
requirements such as your leave of absences policies, employee discipline and
termination policies, and performance management programs?
As a first step to ensure compliance with these and other issues we would conduct
an HR audit. This is comprised of an on-site visit to review all documents, postings,
policies and procedures, an interview with either senior management or the chief HR
executive, and a written report of our findings and recommendations.
Next we try to minimize liabilities further by ensuring your current polices and
practices are consistent. To do this we review:
- Policy and Procedure Manuals and specific policies as necessary.
- Job Description format and content. Are they fair, do they make sense, and most
importantly are they based upon objective criteria and compliant with all ADA and other
- Employee Handbook format and content. What does the handbook say and how does it
say it? Is it pro-active and positive in outlook and language, or re-active and
authoritarian, or basically a list of rules?
- Current Practices (not just policies and procedures) to ensure consistency. If
the handbook and policy manual say one thing but your actual practices are different,
it is your practices that will leave you vulnerable.
Once we have minimized the liabilities we can focus on increasing the assets by
ensuring your programs are competitive and help you attract, retain and motivate key
talent. We do this through:
- Market Pricing Studies to ensure salary levels are reasonable and competitive.
- Benefits Review to ensure benefit programs are also competitive and as cost
effective as possible.
- Development of Salary Structures and Performance Management Programs to identify
and reward higher performers at the expense of poorer performers.
- Development of Offer Letters and Starting Packages to assist in attracting the
best possible talent.
- Review of Current Incentive Plans to ensure current employees are motivated in a
cost effective manner and that the emphasis is on a growth in variable costs
(incentive dollars paid for achieving goals) rather than fixed costs (base salary
increases based on length of services).
We can further improve employee assets by helping our clients develop programs that go
beyond merely being competitive but are more creative such as:
- The Development of Incentive Compensation Plans for:
- Senior Executives
- The Development of Long Term Cash or Equity Plans for Executive Management and
- The Development of Creative Ways to compensate the Board of Directors.