Pros and cons of HR audits

• HR audits provide many benefits for employers, but also some potential negatives.

There are numerous benefits to a human resources (HR) audit if it is properly conducted and acted upon. However, there are some potential negatives as well. Before conducting an audit, be aware of the following points.

Benefits

First, an HR audit can help to identify and correct regulatory non-compliance problems, which can help reduce liability.

A second benefit is that an audit can serve as an educational tool. It can increase employee awareness and understanding of human resources, and the audit process can also be an opportunity to demonstrate a company’s commitment to compliance and employee relations.

Third, audits may identify ways to improve the efficiency and cost-effectiveness of an HR system.

Finally, audits may be viewed favorably by regulatory agencies and in legal proceedings. A thoroughly completed HR audit with proper follow-up can signal that a company is making a good-faith effort to comply with applicable regulatory requirements and good practices.

Potential drawbacks

An HR audit may uncover previously unknown problems, and the solution may not always be simple. If a violation of a regulation or law is discovered, what will be done?

Failure to correct problems identified in an audit can potentially lead to many more problems. Implementing corrective actions in a timely manner is an important part of conducting an audit. If problems are identified in an audit and nothing is done to correct the situation, this information may be used against a company in future enforcement proceedings.

Making HR audits work for the company

• Employers should consider the scope and applicable laws when performing an HR audit.

The benefits of human resources (HR) audits outweigh the negatives, and in no way should drawbacks discourage a company from performing an audit. Some important points to keep in mind to help make safety audits a consistent benefit to a company include the following:

Scope

Before employers begin an audit, determine the scope. A particular company many only want to examine its recruiting practices to ensure compliance with Equal Opportunity Employment laws. Another employer may want to audit all of its human resources policies, procedures, and systems.

Areas that are good candidates for auditing include:

• Employee handbooks,
• Equal employment opportunities,
• Discrimination,
• Affirmative action,
• Recruiting,
• Hiring,
• Termination/separation,
• Pay,
• Leaves,
• Benefits,
• Discipline,
• Drug testing,
• Privacy,
• Background checks, and
• Policies.

Determining the scope will help a company set realistic timetables to complete the audit.

Laws

Once the scope is set, the next step is determining what federal, state, or local laws apply to the audit area. This can be a lengthy and tricky process. A good starting point is identifying laws that depend upon the size of the employer for coverage (e.g., the Family and Medical Leave Act) and laws that apply because of the nature of the business or industry (e.g., Drug-Free Workplace Act).

Once the audit is complete, the information gathered needs to be reviewed and compiled such that it can provide the appropriate results. Audits usually indicate that there are opportunities for improvement, and these should be prioritized and handled.

Sample HR audit checklist

• Employers should follow or create a list of questions to guide the company’s HR audit.

Depending upon the human resources (HR) department’s (and the organization’s) activities and needs, what needs to be audited may vary. If there is no union, for example, labor management issues should not be a concern. The following list of questions is not meant to be comprehensive to every organization, but offers the types of questions that may be found in an HR audit.

• Management
  • Are HR goals in line with those of the organization?
  • Are workweeks identified and defined?
  • Are full-time and part-time hours defined?
  • Are shifts defined?
  • Is there open communication to and from the HR department?
• Hiring
  • Do job descriptions exist?
  • Are job descriptions up to date?
  • Are I-9 forms and acceptable documentation reviewed annually?
  • Are job openings offered to current employees?
  • Are applicant references checked?
  • Are turnover rates monitored?
  • Are selection processes used consistent to the Uniform Guidelines?
  • Are all applicants required to fill out and sign an application form?
  • Are applicants asked to voluntarily identify affirmative action information
  • If applicable, do application forms identify that the employment relationship at the organization is “at-will”?
  • Do employment applications refrain from requesting inappropriate information?
  • Are independent contractors accurately identified?
  • If the organization has a qualifying federal contract, is there an affirmative action plan?
  • Are all new hires reported to the state new-hire reporting agency?
  • Are I-9s and medical information kept separately from personnel files?
  • Do new employees fill out W-4 forms?
  • Are W-4 forms sent to the Internal Revenue Service (IRS)?
• New employees
  • Are workplace policies in place?
  • Are policies communicated?
  • Are policies enforced?
  • Is there an employee handbook?
  • Is the employee handbook specific to the workplace?
  • Do employee orientations take place?
  • Are employees trained on policies and work rules?
  • Are employees trained on discrimination issues?
• Wages and hours
  • Are compensation levels monitored and reviewed?
  • Are employees correctly designated as exempt or nonexempt per the Fair Labor Standards Act (FLSA)?
  • Is there a formal pay structure?
  • Is the compensation structure reviewed regularly?
  • Is working time documented?
  • Are structures developed for paid time off (vacation, holidays, etc.)?
  • Are non-exempt employees compensated at least one and one-half times the hourly wage for any hours worked beyond 40 per week?
  • Is the compensation plan communicated to all employees?
  • Are appropriate payroll withholdings performed?
• Benefits
  • Are employees informed about company benefits?
  • Are Summary Plan Descriptions (SPDs) provided to plan participants?
  • Are general COBRA notices provided to plan participants?
  • Are employees allowed up to 12 weeks of leave under the Family and Medical Leave Act (FMLA), or 26 weeks to care for an injured servicemember?
  • Are plan documents in compliance with the Employee Retirement Income Security Act?
  • Are supervisors and managers trained to report employee absences of more than three days to HR for FMLA purposes?
  • If there is a health care plan, is protected health information kept private?
  • Are all Form 5500s completed and reported?
• Employee relations
  • Is there a system for performance evaluation?
  • Does the system check for effectiveness of the evaluation?
  • Is quality and quantity of work evaluated?
  • Is performance tied to compensation?
  • Are workplace policies flexible?
  • Are disciplinary actions for violations of workplace policies flexible?
  • Is there a process for employees to lodge complaints?
  • Are there a variety of individuals to whom employees may lodge complaints (e.g., supervisor, HR representative)?
• Safety and security
  • Are safety hazards reported to the appropriate personnel?
  • Are workplace accidents, near-misses, injuries, and illness reported and investigated?
  • Are measures in place to prevent intruders from entering the grounds or buildings?
  • Is bright, effective lighting installed indoors and outdoors?
  • Are measures in place (access badges, traffic control, etc.) to keep unauthorized persons from entering the facility through normal entrances?
  • Is there a reliable response system when an alarm is triggered?
  • Are employees encouraged to promptly report incidents?
  • Are employees encouraged to suggest ways to reduce or eliminate risks or hazards?
  • Are structures readily accessible to disabled employees?
  • Are minors prohibited from performing hazardous work?
• Discrimination and employee protections
  • Are employees trained on discrimination issues?
  • Are supervisors and managers trained in anti-discriminatory practices?
  • Are employment practices in line with the various anti-discrimination laws?
  • Are minors prohibited from working more than the hours allowed by the FLSA or state laws?
  • Are effective policies in place that prohibit retaliation against employees who exercise employee rights?
• Workers’ compensation
  • Are injuries/incidents investigated?
  • Is follow-up remediation performed where appropriate?
  • Is regular contact made with employees out on lost time?
  • Are return-to-work programs checked for effectiveness?
  • Is contact made with medical providers?
  • Are insurance premiums and competitive quotes reviewed on a periodic basis?
  • Is the workplace environment maintained with safety in mind?
  • Are state (new and existing) requirements monitored?
• Employee separation
  • Do exit interviews take place?
  • Are final paychecks provided on time?
• Recordkeeping and other documentation
  • Are personnel files current?
  • Are all appropriate labor posters displayed in a conspicuous place?
  • Are documents regarding employees kept for the required duration?

Determining who is “high potential” for a succession plan

• Employers should determine which employees have high-potential traits that can be developed as part of a succession plan.

The most important part of a succession plan is determining which employees will be developed. The goal is to develop a pool of employees for a range of executive or management positions. If the company targets certain employees for specific positions, the plan runs the risk of being derailed in any number of ways. For instance, an employee slated for a specific position could decide to leave for another opportunity, leaving the company without a “Plan B.” Steadily developing a pool of employees helps eliminate the risk of having no one ready to step up when the time comes.

When determining which employees to develop, remember that just because an employee is a high performer in his current position, it does not automatically mean the employee will be a high performer in an upper-level position. The level of complexity increases the higher up the ladder. Different positions require different attributes. The attributes that are necessary to be a successful executive are different from those necessary to be a successful manager.

For example, while one position requires the individual to be a visionary and see the big picture, the other requires a skill at implementation of policies and procedures, and paying attention to detail. An individual may not be capable of shifting gears from one set of traits to the other.

Generally, 3 to 5 percent of the total employee population will have high-potential traits. This is the group to target for development in a succession planning process.

The succession plan assessment process

• A company should have an assessment process to help identify high potential people for its succession plan.

Identifying high potential people requires an assessment process. First, the upper-level positions to be filled must be analyzed to determine what is necessary in terms of knowledge, skills, abilities, traits, experience, education, certifications or professional licensing, and core competencies.

Pool of employees

After this is done, look at the pool of employees and decide who may have the foundation to fill one or more of these positions. Identify what education, experience, and other qualifications an individual has, and what the person is lacking.

Also, determine what an individual’s interests are in terms of future career direction. The person may have a different idea of how to advance in the company. By identifying what position or positions individuals are interested in, the person’s training and development can be geared in that direction if it is consistent with the overall succession plan.

Taking the next step for a succession plan

• Employers should determine which key positions to focus on for a succession plan.
• Sometimes filling key positions with outside talent benefits a company more than preparing current employees to move up.

After identifying succession plan needs and employee availability, develop those resources to meet future needs. Decide, based on the employee’s background and interests, which positions in the company the employee might be a good fit for, and the degree of suitability for each position for which the person might be considered.

The employee’s training and development should be geared toward these positions, or a particular position, if appropriate. Ideally, the employee will receive the education and training necessary to be qualified to perform in the new job before actually being called upon to do so.

Determine on an individual basis what hurdles an employee must overcome to move up one to two levels in the organization within a relatively short period of time, generally 36 months or so. This is a commonly used measurement for determining a high potential employee. If the employee can overcome the obstacles (obtain the required training, knowledge, and experience), the employee should be considered as having potential. If not, it doesn’t mean the employee can’t be developed and moved into a higher-level position, but the employee probably won’t be a contributor at the high level needed.

Key company positions

In determining the employees to develop, consider which positions may need to be filled sooner, then determine which employees might be put on the “fast track” to fill these positions. These positions will be more specifically geared to certain people because of the time frame involved. This is more along the lines of “replacement planning” than “succession planning” because the need is more immediate.

When to look outside

It is important to note that it is not necessarily desirable to fill all upper-level positions from within. While the company must maintain some continuity, it also wants to bring in fresh ideas and experiences. When determining which employees to develop for future positions, consider bringing in new employees, especially where a knowledge or experience gap exists in the talent from the employee pool.

Choose wisely

During the employee development process, make wise decisions. Some employees may only be competent up to a certain level. It is not wise to assume that all employees who appear to have potential will actually thrive in an executive or upper management capacity. Don’t take a great manager and place him or her in a position that is beyond the employee’s capabilities, thereby creating an ineffective executive.

Putting sufficient time and effort into the process of developing the right employees for the most suitable positions helps avoid situations like this. By taking great care in the succession plan process, it can be a win-win situation for everyone.

Creating a succession plan

• Employers should define exactly what the organization is trying to accomplish with its succession plan before continuing the process.

Many companies have a formal succession planning program. In those companies, the human resources department typically provides tools (such as a policy, formal training and mentoring programs, and documentation forms), but identifying and developing high-potential employees usually remains the responsibility of individual managers and supervisors.

In some organizations, succession planning is confidential, done entirely without the knowledge of the employees tagged for development. In other companies, the employees who are being considered for advancement know it and actively participate in the process. Regardless of which position the company takes, remember that the company is developing employees for additional responsibilities — but not making promises for promotions or changes in job responsibilities.

Reasons for a succession plan

Organizations develop succession plans for a variety of reasons. Among those reasons are:

• To ensure there are people available to fill key positions at all times,
• To ensure ongoing business success and continuity,
• To transfer business knowledge and values,
• To prepare the future leadership of the company,
• To contribute to the longevity and success of the organization,
• To maintain the organization’s value to shareholders,
• To ensure an orderly transfer of power, and
• To provide a continuous pipeline of employee talent to meet the organization’s needs in key management positions.

Before creating a succession plan, first lay the groundwork. Define exactly what the organization is trying to accomplish with this process. In a smaller organization, it may involve no more than finding successors for a few key positions in the organization. In a larger organization, it may involve developing multiple succession plans for different management tiers involving hundreds of people.

Written affirmative action plans

• Certain federal contractors are required to develop and implement a written affirmative action plan (AAP) for each establishment.
• The contractor creates, files, and implements the AAP.

The regulations implementing affirmative action establish different provisions for non-construction (i.e., service and supply) contractors and for construction contractors.

Non-construction (service and supply) contractors with 50 or more employees and government contracts of $50,000 or more are required to develop and implement a written affirmative action plan (AAP) for each establishment. The regulations define an AAP as a set of specific and result-oriented procedures to which a contractor commits itself to apply every good faith effort.

Employers with 50 or more employees and a federal contract of $50,000 or more must also maintain a written AAP for individuals with disabilities. Contractors with 50 or more employees and a contract of $150,000 or more must complete a written AAP for protected veterans.

As part of this program, contractors are obligated to institute outreach and recruitment efforts to employ and advance qualified individuals with disabilities at all levels of employment, including the executive level.

Developing an AAP

The AAP is developed by the contractor to assist in a self-audit of its workforce. The AAP is kept on file and carried out by the contractor. It is submitted to the Office of Federal Contract Compliance Programs (OFCCP) only if the agency requests it for the purpose of conducting a compliance review. Affirmative action regulations for non-construction (service and supply) contractors are found at 41 CFR 60-2.

The AAP identifies those areas, if any, in the contractor’s workforce that reflect under-utilization of women and minorities. The regulations define under-utilization as having fewer minorities or women in a particular job group than would reasonably be expected by availability.

When determining availability of women and minorities, consider the presence of minorities and women having requisite skills in a geographic area in which the contractor can reasonably recruit.

Based on the utilization analyses and the availability of qualified individuals, the contractors establish goals to reduce or overcome the under-utilization. Good faith efforts may include expanded efforts in outreach, recruitment, training, and other activities to increase the pool of qualified minorities and females. The actual selection decision is to be made on a non-discriminatory basis.

Requirements for construction contractors

• Affirmative action regulations for construction contractors are specific to the industry.

Affirmative action requirements also apply to construction contractors and subcontractors that hold any federal or federally assisted construction contract more than $10,000.

However, the Office of Federal Contract Compliance Programs (OFCCP) has established a distinct approach for the construction industry due to the fluid and temporary nature of the construction workforce. In contrast to the service and supply affirmative action program, the OFCCP, rather than the contractor, establishes goals and specifies affirmative action which must be undertaken by federal and federally-assisted construction contractors. OFCCP has issued specific national goals for women. The female goal of 6.9 percent was extended indefinitely in 1980 and remains in effect today.

Construction contractors are not required to develop written affirmative action plans. The regulations enumerate the good faith steps construction contractors must take in order to increase the utilization of minorities and women in the skilled trades.

Affirmative action regulations for construction contractors are found at 41 CFR 60-4.

Affirmative action enforcement and penalties

• The OFCCP enforces several discrimination regulations for federal contractors.
• Federal contractors that violate affirmative action provisions may be subject to OFCCP penalties.

The Office of Federal Contract Compliance Programs (OFCCP), under the Department of Labor, enforces:

• Executive Order 11246, as amended;
• Section 503 of the Rehabilitation Act of 1973, as amended; and
• The affirmative action provisions (Section 4212) of the Vietnam Era Veterans’ Readjustment Assistance Act, as amended.

Taken together, these laws ban discrimination and require federal contractors and subcontractors to take affirmative action to ensure that all individuals have an equal opportunity for employment, without regard to race, color, religion, sex, sexual orientation, gender identity, national origin, disability, or protected veteran status.

The OFCCP requires a contractor, as a condition of having a federal contract, to engage in a self-analysis for the purpose of discovering any barriers to equal employment opportunity. OFCCP also investigates complaints of discrimination.

Penalties

If the OFCCP determines that a contractor has violated the affirmative action provisions, it may impose sanctions, including:

• Requiring changes in the plan, company procedures, or hiring and pay practices;
• Canceling, terminating, or suspending a contract; or
• Debarring the contractor from future government contracts.

Affirmative action for individuals with disabilities

• A successful affirmative action plan for persons with disabilities contains many elements.

The components of a successful affirmative action plan to recruit, employ, and advance people with disabilities include the following:

• Assign a company official to be responsible for the implementation of affirmative action activities.
• Prepare and post an equal opportunity policy statement.
• Review personnel processes to ensure job applicants and employees with disabilities are considered for all job vacancies and training opportunities, and are not stereotyped in a manner which limits access to all jobs for which the individual is qualified.
• Make reasonable accommodations to the known functional limitations of otherwise qualified individuals with disabilities. Review all job qualification standards to ensure the standards are job-related for the position and consistent with business necessity.
• Develop and implement procedures to ensure that employees with disabilities are not harassed because of disability.
• Undertake appropriate outreach and positive recruitment activities such as:
  • Establishing formal arrangements for applicant referrals with recruitment sources such as state employment security agencies, state vocational rehabilitation agencies, college placement offices, labor organizations, and organizations of or for individuals with disabilities;
  • Participating in work-study programs with schools which specialize in training or educating individuals with disabilities;
  • Including current employees with disabilities in promotional literature and career programs;
  • Sending written notification of the company affirmative action policy to subcontractors, vendors, and suppliers; and
  • Considering applicants with known disabilities for all available positions for which the person may be qualified, not just the one for which the person applied.
• Train all personnel involved in recruitment, screening, selection, promotion, disciplinary action, and related processes to ensure that affirmative action steps are taken.
• Develop procedures to disseminate information about affirmative action policies within a company in order to ensure greater employee cooperation and participation.
• Design and implement an audit and reporting system to measure the effectiveness of an affirmative action plan. Where an affirmative action plan is found to be deficient, actions must be taken to remedy the situation.

Recordkeeping

• Federal contractors must document affirmative action plans and keep several personnel or employment records in case of a compliance review.
• Some exceptions apply to contractors that have fewer than 150 employees or that do not have a government contract of at least $150,000.

Contractors must maintain and make available to the Office of Federal Contract Compliance Programs (OFCCP) documentation of compliance with 41 CFR sections 60-2.11 through 60-2.17. This documentation must include:

• Organizational profile,
• Job group analysis,
• Placement of incumbents in job groups,
• Determining availability,
• Comparing incumbency to availability,
• Placement goals, and
• Additional required elements of affirmative action programs.

In addition, during a compliance review, a compliance officer examining the contractor’s affirmative action program may ask to see personnel, payroll, and other employment records.

Personnel or employment records

Any personnel or employment record made or kept by the contractor must be preserved for not less than two years from the date of the making of the record or the personnel action involved, whichever occurs later. However, if the contractor has fewer than 150 employees or does not have a government contract of at least $150,000, the minimum record retention period is one year from the date of the making of the record or the personnel action involved, whichever occurs later.

Such records include, but are not limited to records pertaining to:

• Hiring,
• Assignment,
• Promotion,
• Demotion,
• Transfer,
• Layoff or termination,
• Rates of pay or other terms of compensation,
• Selection for training or apprenticeship and other records having to do with requests for reasonable accommodation,
• Results of any physical examination,
• Job advertisements and postings,
• Applications and resumes,
• Tests and test results, and
• Interview notes.

Involuntary termination

In the case of involuntary termination, the personnel records of the individual terminated must be kept for not less than two years from the date of the termination. There is an exception for contractors that have fewer than 150 employees or that do not have a government contract of at least $150,000 — records must be kept for not less than one year from the date of the termination.

Complaint of discrimination

Where the contractor has received notice that a complaint of discrimination has been filed, that a compliance evaluation has been initiated, or that an enforcement action has been commenced, the contractor must preserve all personnel records relevant to the complaint, compliance evaluation, or enforcement action until final disposition of the complaint, compliance evaluation, or enforcement action.

The term “personnel records relevant to the complaint” would include personnel or employment records relating to the complainant and to all other employees holding positions similar to that held or sought by the complainant. This includes application forms or test papers submitted by unsuccessful applicants and by all other candidates for the same position as that for which the complainant unsuccessfully applied. Where a compliance evaluation has been initiated, all personnel and employment records described above are relevant until OFCCP makes a final disposition of the evaluation.

Affirmative action programs

• Certain federal contractors are required to develop an affirmative action program and set numeric goals for veterans and disabled applicants.

A contractor establishment required to develop and maintain a written affirmative action program (AAP) must maintain its current AAP and documentation of good faith effort, and must preserve the preceding year’s documentation, unless it was not then covered by the AAP requirement.

For any record the contractor maintains under AAP requirements, the contractor must be able to identify:

• The gender, race, and ethnicity of each employee; and
• Where possible, the gender, race, and ethnicity of each applicant.

Goals required for veterans and disabled applicants

Beginning in 2014, employers required to maintain affirmative action plans addressing veterans and individuals with disabilities were required to set numeric goals for placement of workers in these groups.

For veterans, contractors must either adopt a benchmark based on the national percentage of veterans in the workforce (6.4 percent, effective March 31, 2018) or a benchmark set by considering several factors, including the availability of veterans in the contractor's state and recent applicant and hiring ratios. This hiring benchmark functions differently from the goals in affirmative action plans for women and minorities and also the goal for individuals with disabilities. The veteran benchmark simply provides a yardstick against which contractors can measure the success of efforts to recruit and employ qualified veterans.

For individuals with disabilities, on the other hand, contractors must set a hiring goal that 7 percent of each job group be qualified individuals with disabilities. When the percentage of individuals with disabilities in one or more job groups is less than the 7 percent goal, the contractor must take steps to determine whether barriers to equal employment exist. Contractors must then develop and execute action-oriented programs to correct any identified problem areas, such as those expected for women and minorities. Again, this is not the case with the veteran benchmark.

In-Depth Articles

Is a handbook required?

• While not required, employee handbooks are a vital communication tool for employers.
• An employer should routinely update its handbook and give the updated version to employees.

Employee handbooks are not legally required (unless there are state requirements); however, most companies find them to be invaluable. Without a handbook, policies and procedures tend to informally change, and employees may not understand exactly what the current policy says. Having clearly written policies, centrally located, helps ensure that employees (and supervisors and managers) follow company procedures.

Plus, through the process of actually writing a handbook, employers are forced to think about policies and procedures. This allows a company to make enhancements and think through its policies.

If employers have employees sign a statement upon receipt of the handbook, it may not be appropriate to have employees sign that the person “has read” the handbook if that person hasn’t actually read it yet. Instead, the statement could say that employees “agree to read and follow” the handbook. If there is a later dispute, the statement will more accurately reflect the situation, and also places responsibility on the employees to read the book.

Some employees may refuse to sign a receipt. If so, document that the employee was given a copy and show it to the employee. This helps prove that the employee was given a book and was informed that the person is expected to follow its provisions.

If employers provide employee handbooks, be certain to clarify that each new edition represents the revised company policies, and that former versions are no longer valid. Some employees have brought out old handbooks and expected the company to abide by them. A signed receipt for the new version should document the employee’s understanding that all previous handbook versions are void.

Contents of the handbook

• A company should include many important communications in its employee handbook.
• Policies that do not need to be in an employee handbook can be created and distributed as needed.

While the contents of an employee handbook will vary from company to company, there are some elements that are common to most. These include:

• At-will statement. This indicates that nothing in the handbook should be considered above the at-will relationship, and that the handbook is not an employment contract which may be changed from time to time.
• Equal opportunity employment statement. This statement should reaffirm that the company will not discriminate based on race, color, religion, sex, national origin, disability, age, and any other categories protected by the state.
• Policies. All policies related to employees should be in the company handbook.
• Benefits. Either provide summaries of benefits and refer employees to the actual insurance policy, etc., or provide text in the handbook.
• Who handles what. Handbooks should explain who handles various employment and human resources related issues, such as “where to go for a new employee ID,” “who to contact when an employee has a name or address change,” etc.
• Safety and emergency information. A handbook might not include actual emergency maps or safety and health programs, but it should outline employees’ safety responsibilities and direct employees to whom should be contacted with questions.
• Company facts and history. The more employees know about a company, the more employees will respect it and work to keep it respectable and profitable. This is a good place to publish the organization’s mission and vision statements.
• Special services. The company may provide services to employees such as discount tickets to local events or dry cleaning.
• Acknowledgment statement. It’s wise to have employees sign that each person has received the handbook and agreed to read it.

Many employers have heard advice to avoid describing the first few months of employment as a “probationary period.” Employers commonly tell employees a person can be fired at any time during this period. However, once this period ends, the employee may assume to be “permanent.” Employers want to avoid any implication that the “at will” status ends after the first few months.

At-will status

While the first few months of employment can still be described as a probationary or introductory period, be certain that employees understand the at-will status does not change upon completion of that period, and the employee should have no expectation of guaranteed employment after the introductory period ends.

Other information

There are some other provisions a company may want to consider including in the employee handbook. Employers may want to include information that indicates the company retains the right to terminate employees for cause. Employers may want to touch on what actions or behaviors may constitute reasons for cause. This can lead to information on the company’s disciplinary policies.

Information on discipline may describe situations in which absolutely no tolerance should be expected. These situations might include engaging in workplace violence, engaging in unsafe behavior, theft, or destruction of company property, using or being under the influence of illegal drugs, providing false information on a job application, or harassment. These are only some examples. Depending upon the company, employers should include those acts that the company feels are important.

If employers choose to provide a list of sample acts that may be cause for immediate termination, be sure to indicate that the list is not comprehensive and that the company reserves the right to determine what constitutes cause.

For acts that do not justify immediate termination, employers may want to indicate that the company may take into consideration such things as the severity of the conduct, the employee’s record, the employee’s response to the situation, and the impact of the action.

Employee orientation period

Another topic employers may want to cover is employees’ orientation period, the length of the period, what is expected of employees during this period, and consequences if employees do not meet expected requirements. A company may perform evaluations during this period, which should be defined, as well as whether the period may be extended.

Department-specific policies

Not all policies need be included in the employee handbook. Many companies have department-specific policies that do not have a company-wide application. For these situations, a company can create guidelines or procedures for specific departments as needed.

Since handbooks are not required, employers can certainly create different provisions for employees who work at different locations. This may even be necessary if employees are in different states (where state laws may invalidate certain policies) but employers can have different handbooks for various locations in the same state as well.

As an example, an employer might have a location in a state where unused vacation can be lost if not used within a certain time frame (a “use it or lose it” policy). That employer may have a facility in another state where such polices are not allowed. The company does not need to grant all employees (at all locations) the greater benefit and may have different vacation policies in each state.

Are any policies required by law?

• Federal agencies generally require a company to display posters on important policies rather than including the policies in the employee handbook.
• Employers should have a policy on anything employees are expected to know, especially for legal reasons.

Very few policies are mandated by law. If a state or federal agency wants to make employees aware of something, the agency requires a poster rather than a policy. For example, policies on discrimination and harassment are strongly recommended, but are not actually required by federal law. However, the U.S. Equal Employment Opportunity Commission (EEOC) does have a poster on discrimination laws. Most employers probably have posters on minimum wage, Family and Medical Leave Act (FMLA) rights, Occupational Safety and Health Administration (OSHA) compliance, and so on.

At the federal level, the FMLA regulations state that employers must provide the general notice to employees (which has the same information as the poster) “by including the notice in employee handbooks or other written guidance to employees concerning employee benefits or leave rights, if such written materials exist, or by distributing a copy of the general notice to each new employee upon hiring.” This means that even if employers have a handbook, the FMLA general notice could still be distributed separately.

Important communications

Although there aren't many mandatory policies, employers should have a policy for any subject that employees are expected to know about, or which might offer legal protection. Obviously, this could be extensive, but a basic topic list includes:

• FMLA (if the company is covered);
• Other types of leave that might be required by state law (such as time off for voting, attending court proceedings, and so on);
• Discrimination and harassment, and how to report concerns;
• No expectation of privacy in the workplace — that the company may monitor computer use, including websites visited and emails sent through a company server, and that the company reserves the right to search workplace areas such as desks and workstations;
• Drug testing (if employers conduct such tests, or reasonable suspicion testing);
• Benefits offered at the company's discretion (vacation, sick leave, holiday pay, etc.);
• Attendance requirements and call-in procedures for absences (in case discipline or termination is imposed for absences);
• Recording all working time, including overtime (to avoid potential litigation by hourly employees who might work from home or think a person is “helping” the company by working without pay); and
• Expected standards for workplace conduct (treating each other with professionalism, bullying, theft, workplace violence, dress codes, and even use of alcohol).

The above list is deceptively short. For instance, the final item might include policies on professional conduct, ethics, alcohol use, dress codes, workplace violence, and others. However, the list provides an overview of the most common policies that employers should have. Most other policy topics are in the “nice to have” category and are at the employer's discretion (such as advances of wages or vacation, use of office supplies, and so on).

Common problems with policies

• Company policies can have many problems, including reactive policies, policies written in legalese, the appearance of employment contracts, and more.

Perhaps there are problems with some policies, but the company hasn’t had time to address them. Perhaps the policies seem well-written and comprehensive. That's possible, but odds are, a company's policies (or its handbook as a whole) have at least one of the following problems.

1. The policies are reactive. Many companies don't create policies until a question of how to handle a particular situation arises. Unfortunately, such a strategy means that the first instance of most issues in the workplace will be met with puzzled looks and confused employees. Make a point to create policies to address emerging issues in the workplace (like employee social media use and “bring your own device” policies) before these situations arise. This way, employees will know what to expect, and a company and its managers and supervisors can enforce a consistent standard.
2. The policies don't reflect changes to federal and state laws. In many organizations, company policies are created and then remain untouched for years, but regular review (and often updating) of such policies is necessary. For instance, decisions from the National Labor Relations Board over the past few years have greatly affected the extent to which employers can prohibit employees from discussing “confidential information,” and from saying “disparaging” or “negative” things about the employer. The Americans with Disabilities Act, as amended, has also provided broader protections for employees. For policies to be effective (and legal), monitor for changes like these at both the state and federal level, and revise the policies as needed.
3. The policies are written in legalese. If the policies are written in a way that employees would need a law degree to comprehend, the policies won't help clarify rules and expectations in the workplace. Polices should be written in layman's terms and backed up with verbal reinforcement from managers and supervisors. While a complicated policy could still hold up in court, it's best if the policies are clear enough to help keep a company out of the courtroom in the first place.
4. The policies create employment contracts. Legal professionals often recommend that employers include a statement in company handbooks that nothing negates the at-will employment relationship. That's because policies that are too detailed can create a contract of employment. For instance, if a progressive discipline policy insinuates that a certain process will always be followed before an employee is terminated, an employee who was terminated more abruptly may be able to argue that the company wrongfully terminated the employee.
5. The policies are not consistently enforced. There are many reasons policies might not be enforced consistently. The policies might be outdated, for example, or might not mesh with company culture. Whatever the reason, policies should be deviated from only for good reason and in special circumstances. Otherwise, inconsistently applied policies can actually create legal risk instead of mitigating it, which most handbooks are intended to do.

A review of the company's handbook at least annually is wise and will allow employers to keep an eye on some of the more common ways company policies go astray. A legal review may not be necessary every year, but a little extra protection is never a bad thing, either.

• For more information on performance appraisals, click here.
• Click here to learn more about motivating employees.
• For further details on discipline measures for employees, click here.
• Access more information on employee separation and termination issues by clicking here.

Are HR audits necessary?

Question: Is it worth allocating company time and resources to an HR audit? With staffing shortages taking a toll, I’m not sure I can justify the benefits to my leadership team.

Answer: When weighing the pros and cons of a human resources (HR) audit, keep in mind that a successful audit can help identify and correct regulatory non-compliance problems, which can help reduce your company’s liability.

A second benefit is that an audit can serve as an educational tool. It can increase employee awareness and understanding of HR, and the audit process can also be an opportunity to demonstrate your company’s commitment to compliance and employee relations.

Third, audits may identify ways to improve the efficiency and cost-effectiveness of an HR system.

Finally, audits may be viewed favorably by regulatory agencies and in legal proceedings. A thoroughly completed HR audit with proper follow-up can signal that your company is making a good-faith effort to comply with applicable regulatory requirements and good practices.

Succession plan assessment factors to consider

• Employers should consider several factors when assessing which employees belong in its succession plan.

In assessing individuals for a succession plan, a company should consider several factors:

• The employee’s work history, both internal and external. Look for a history of progressively responsible experience. In addition, some previous experience may not bear on the employee’s current position, but may prove helpful in a future position.
• The employee’s current and past performance. Look at performance reviews.
• Core competencies. In addition to the standard performance review, a list of core competencies for the upper-level positions should be developed, and the employee evaluated with respect to each competency.
• 360-degree feedback. Consider implementing 360-degree feedback evaluations to determine any weak points in the employee’s armor. For instance, an employee might meet deadlines ahead of schedule and churn out consistently good work, but treat vendors poorly or have a history of not returning phone calls. This could show a lack of respect for others, which may not otherwise be apparent.
• The training the employee has received and how well the new information was integrated into the current job. If the employee had trouble implementing or adapting to new procedures, that could be significant. A capacity to learn and the willingness to adapt are important attributes.
• The employee’s initiative in taking on new projects and coming up with new ideas. This may indicate a propensity to look at the big picture and a desire to steer the course of work projects and take responsibility for the projects.
• The employee’s own interests and career goals. A given employee may not be interested in another position, or may not want the stress of additional responsibilities.
• Personality profile. Conduct a personality profile to assess an individual’s inclination toward a leadership role. Other desirable traits can be assessed in this process as well. Also consider implementing a series of assessment centers. Assessment centers put employees in real-life work situations and evaluate how to handle them. This gives an idea of how well an employee “thinks on his feet,” handles multiple interruptions, juggles priorities, handles irate people, and so on.
• Increasing responsibilities. Give higher level responsibilities to employees’ current positions and see how the employees handle the situation. This might be a special project or an ongoing responsibility. Have a mentor available to help. Learning by doing is the best teacher, and may be the best way to judge how an employee will perform at a higher level.
• New relationships. Determine what new relationships need development. If someone’s experience is weak in a certain area, see that the employee spends some time in that department and learns the process. Cross-functional training is highly valuable in understanding how different facets of the organization are interconnected. Determine how well that information is integrated by the employee. An employee’s learning agility will be an important component of the assessment.

Other factors should be considered, such as a demonstrated willingness to take risks, the capacity to think outside the box, receptivity to criticism, the employee’s dedication to the development process, the ability to think globally, and an understanding that the decisions the person makes will have far-reaching impact.

Emotional intelligence

EQ, or emotional intelligence, should be considered as well. EQ is manifested by the degree the employee motivates others, treats others with respect, demonstrates team-building and relationship-building skills, is aware of own faults (and seeks to correct or minimize them), and so on. It considers traits such as empathy, self-awareness, and social skills.

Create an advisory role for smooth leadership transition

• High-profile leadership positions may require a succession plan that involves mentorship from the outgoing employee to ensure a smooth transition.
• Employers may want to develop an advisory role job description.
• A company can include many duties in an advisory role job description.

For some roles within an organization, particularly high-profile leadership positions such as chief executive officer, employers will want to have a succession plan that involves the outgoing leader serving as an advisor to the incoming leader to ensure a smooth transition.

To keep these two individuals from stepping on each other’s toes during the changeover, a company might want to develop a job description for the advisory role to distinguish it from the acting role. An advisory job description would still be based on the duties and essential functions of the position, but it would focus more on teaching and guiding, rather than doing.

Writing the advisory role job description

When writing the job description for the advisory role, think about what a successful transition will entail and what that means specifically for the company. Employers may want to include some of the following advisory duties:

• Creating a timeline. Together, the incumbent and the new leader should create a detailed timeline for the transition of all duties and responsibilities (this should include when the authority for making final decisions transfers from old guard to new.) The employees may want to involve other members of the senior leadership team in the creation of the timeline.
• Knowledge sharing. Think of this as a download of institutional knowledge. The incumbent leader and the incoming leader will want to meet regularly (determine the most appropriate frequency) to discuss not only business operations, but also company history, a vision for the future, and the expectations of all stakeholders (such as the board, senior management, shareholders, employees and customers.)
• Making introductions. The incumbent should introduce the new leader to key internal and external stakeholders, making it clear that the new leader has the person’s full support. One way to do this is to take a phased approach with meetings. For example, use the first board meeting as an introduction where the new leader mostly observes. At the second meeting have the new leader participate, and at the next meeting have the new leader take charge.
• Coaching. Depending on the personalities of the parties involved, the outgoing leader should serve as a coach offering feedback as the new leader takes the reins.

Steps for creating a succession plan

• A company should list competencies needed for critical positions to understand how an incoming employee can be successful.
• Other steps for a succession plan include setting strategic goals, assessing the workforce and developing an action plan.

Although all positions are important, some are more critical than others. Critical positions tend to have long learning curves, specialized (or institutionalized) knowledge, or essential relationships — all based upon achieving the organization’s long-term goals.

Once the company has identified critical positions, build an understanding of what it takes to be successful in each of them. List the knowledge, skills, abilities, and experiences (competencies) needed to do the job — now and in the future. Keep in mind that as the future unfolds, these criteria may change.

Determine the company strategic plan

Determine what the organization’s strategic plan is for the next three, five, and 10 years down the road. This will help identify the direction the organization plans to go in, and dictate what future needs the organization will have.

Identify and describe each critical position that is key to the organization’s success, at whatever level that may be. Identify the current incumbent in each position, and any immediate successor, if already identified.

List the attributes and competencies that are required (and desired) for each position — not necessarily those possessed by the current incumbent. Remember to think of it as filling a position, not replacing a specific individual.

Assess the current workforce

Develop an accurate assessment of the current workforce to know what the development needs are. Perform individual assessments to determine the current level of skills, education, and readiness of employees who can potentially take on future positions. Individual assessment approaches include using 360-degree feedback, executive/management assessments, performance data, assessment centers, and instrumentation (test results).

Identify high-potential employees, then determine who the best candidates are for each position. Do this for more than one potential position to see where an employee would best fit the organizational needs as well as the employee’s individual needs. One individual may be chosen for development for more than one position at an early stage of the process.

Ask employees what is wanted concerning each individual’s career path. This helps employers avoid spending time and money developing employees who have no interest in moving up the ladder or who have other career plans, or a complete career change in mind.

Develop high-potential employees with specific goals in mind. At the early stages, employees can receive general leadership development training, but at later stages of employee development when a particular position has been identified for which the person is being groomed, concentrate on developing that individual for the needs of that position. For example, if that position requires knowledge of international operations, part of the employee’s development may include a year spent abroad at an international location.

Create an action plan

Working with employees, create an action plan to develop competencies, reduce weaknesses, and improve strengths. The plan may include such action items as enrolling in formal classroom training, participating in a mentoring program, taking on temporary assignments, providing project leadership opportunities, rotating jobs within the department, and, of course, receiving coaching.

Document developmental accomplishments, and if the company has a formal succession plan policy, report to the succession committee.

Tips for succession planning

• Employers should consider many factors when creating a succession plan.

A company’s commitment to develop talent in its workforce can lead to company longevity and prosperity. Several factors should be considered as leaders assess the company’s critical positions and the workforce that may be developed to be successors of those jobs. Here are tips to consider:

• Succession planning requires commitment and input from the top. After all, that’s where the future business direction comes from. The plan must be consistent with the overall business strategy.
• The plan must be anchored to the corporate culture. A plan that runs counter to the corporate culture is likely to meet resistance and fail.
• Succession planning is not just for the top of the organizational hierarchy; it is for any and all positions that are key to an organization’s success.
• Look at the position, not the person. Don’t get hung up on the traits of the incumbent and try to replicate him or her. Be open to other possibilities.
• It is the organization’s job to identify high potential employees, not the employees’ job to identify themselves. Limiting the plan only to those who self-identify might result in missing talent that is not readily apparent.
• Obtain buy-in from managers at all levels to identify and develop talent.
• Don’t limit the plan to thinking vertically. Consider lateral transfers as part of the training and development program to broaden employees’ skills, knowledge, and perspective.
• If the company can’t fill most of the top positions from within, it may suggest a need to improve the internal development system.
• When hiring employees from outside the organization, be aware that hiring quality candidates for lower-level positions can allow for later development into future leaders through the employee development program.