Top 10 HR Risks for Businesses and How to Avoid Them

Top 10 HR Risks for Businesses and How to Avoid Them The Executive's Roadmap to Best-in-Class HR Strategy 2014 TriNet Group, Inc. All rights reserved. Reproduction or distribution in whole or part without express written permission is prohibited. This proprietary communication has been prepared for educational and information purposes only. The content does not provide legal advice or legal opinions on any specific matters. Transmission of this information is not intended to create, and receipt does not constitute, an attorney-client relationship between TriNet and you. TriNet is not an insurance company, but rather is the single-employer sponsor of all of its health benefit plans. Nothing contained herein constitutes an offer to sell, buy, or procure insurance.

Welcome! Jacqueline Breslin Director, Human Capital Services, TriNet Jackie Breslin TriNet Based in San Leandro, CA 20 years experience in Human Resources Leads a team dedicated to compliance, workplace investigations and challenging employee relations issues Experience implementing and managing HR programs to include policy development, performance management, compensation, recruitment and retention, learning and development, coaching and M&A activity 2 The Executive's Roadmap to Best-in-Class HR Strategy 2014 TriNet Group, Inc. All rights reserved.

Risk Mitigation: Recognizing and Managing Talent Risks Agenda Meet Our Subject Matter Experts Top Risks in HR Why Managing Risk Is Important and Recommendations Best Practices for Mitigating Risk Questions 3 The Executive's Roadmap to Best-in-Class HR Strategy 2014 TriNet Group, Inc. All rights reserved.

Meet Our Subject Matter Experts Lynne Vu Principal Human Capital Consultant, TriNet Based in Los Angeles, CA SPHR Certified. Over 20 years of experience in the design, development and implementation of human capital processes. Partners with executives on human resources strategy, benefits, employee relations and compliance issues. 4 The Executive's Roadmap to Best-in-Class HR Strategy 2014 TriNet Group, Inc. All rights reserved.

Meet Our Subject Matter Experts Laura Reames Principal Human Capital Consultant, TriNet Based in San Diego, CA SPHR Certified Over 20 years of experience in Human Resources, process improvement, workforce planning strategies, training and compliance. Partners with executives on human resource strategy, benefits, employee relations and compliance issues. 5 The Executive's Roadmap to Best-in-Class HR Strategy 2014 TriNet Group, Inc. All rights reserved.

Risk #1: Company Managers Managers represent the company. Promoted for technical and functional capabilities Inexperienced with new role Experienced but without formal training Responsible for keeping teams motivated and engaged Most managers may not have received formal coaching, development or other management training. Recommendation: Train all levels of management. Do not underestimate the value of continuous employee training and development. 7 The Executive's Roadmap to Best-in-Class HR Strategy 2014 TriNet Group, Inc. All rights reserved.

Risk #2: Poor or Inconsistent Selection Process Inconsistency in hiring can create risk and attrition. Under-trained interviewers May not understand how to use behavioral interviewing techniques effectively May not be aware of the legal risks in conducting interviews May tend to focus on the technical skills of a candidate more than cultural fit Employment applications not used, not used consistently or not used at the proper point in process Background checks not fully utilized Offer letters that may not outline terms and conditions of employment Recommendation: Establish a consistent hiring practice. 8 The Executive's Roadmap to Best-in-Class HR Strategy 2014 TriNet Group, Inc. All rights reserved.

Risk #3: Poor or Inconsistent Onboarding of New Hires Ineffective onboarding has been tied to: Higher staff turnover Lower productivity Lower morale Recommendation: Create an agenda for the employee s first week. Include lunch with the manager and colleagues. Ensure the employee feels welcome. Develop a training schedule for the first 30 days as needed. Set new hire expectations and provide continuous feedback on the employees performance. 9 The Executive's Roadmap to Best-in-Class HR Strategy 2014 TriNet Group, Inc. All rights reserved.

Risk #4: Inconsistent Compensation Practices Compensation guidelines help establish internal and external equity for each position, ensuring fairness and cost management. Equitable pay practices tied to merit have a positive impact on retention of desirable employees. Equal Pay Act requires equitable pay practices for positions requiring similar skills, responsibilities and importance to the organization. Recommendation: Tie compensation both to performance and competitive market rates to bring consistency and objectivity to decisions around pay. 10 The Executive's Roadmap to Best-in-Class HR Strategy 2014 TriNet Group, Inc. All rights reserved.

Risk #5: Employee Status Misclassification Wage and Hour claims are on the rise. Most common challenge: incorrect FLSA classification Results in inaccurate payment of wages, causing costly wage and hour claims Misclassifying independent contractors or temporary employees exposes company to potential fines and penalties. Recommendation: Seek legal counsel with experience in employment law for guidance on classifications. 11 The Executive's Roadmap to Best-in-Class HR Strategy 2014 TriNet Group, Inc. All rights reserved.

Proactive versus Reactive U.S. Equal Employment Opportunity Commission (EEOC) received a record 93,727 charges of employment discrimination in 2013 $372.1 million was paid in relief 12 The Executive's Roadmap to Best-in-Class HR Strategy 2014 TriNet Group, Inc. All rights reserved.

Risk #6: Lack of Performance Management System A performance management system improves communication and ensures each employee s actions and focus is aligned with the company s objectives. A Performance Management System: Assists management in setting corporate goals Aligns corporate goals with individual employee goals Monitors progress and documents performance Recommendations: Reward and pay based on deliverables and provide performance input to executive team regularly. Develop shared expectations around performance ratings. Use goal-setting templates and performance review forms in developing performance management system. 13 The Executive's Roadmap to Best-in-Class HR Strategy 2014 TriNet Group, Inc. All rights reserved.

Risk #7: Insufficient Documentation Documenting performance issues protects the company. Failing to document employee issues creates: Difficulty for managers Liability for company Employee confusion Recommendation: Use a Performance Management process and document performance issues as they arise. 14 The Executive's Roadmap to Best-in-Class HR Strategy 2014 TriNet Group, Inc. All rights reserved.

Risk #8: Nonexistent or Incomplete Job Descriptions Clear job descriptions promote accomplishment of business objectives and protect the organization from charges of discrimination and unfairness. Clear job descriptions support: Compensation planning Recruiting Realistic expectations Define essential functions of the job Recommendations: Use a job description questionnaire to assist gathering of information. Cover not only essential functions, but physical and other requirements for ADA compliance. 15 The Executive's Roadmap to Best-in-Class HR Strategy 2014 TriNet Group, Inc. All rights reserved.

Risk #9: Failure To Handle Leaves of Absence or ADA Interactive Process Correctly Consistent ADA and leave policies and procedures are essential for compliance purposes. Published policies help ensure: Employees are aware of their rights under the applicable leave laws based on company size work location Employees understand company expectations of them Employees know what they can expect from the company Recommendations: Ensure ADA and leave policies are documented and accessible to employees. Train managers on the interactive ADA and leave process and make sure managers know where to go to with questions and for assistance. 16 The Executive's Roadmap to Best-in-Class HR Strategy 2014 TriNet Group, Inc. All rights reserved.

Risk #10: Failure to Train on Harassment Prevention Harassment prevention training sometimes limits the company s liability. Can prevent workplace harassment Educates employees and supervisors on identifying inappropriate behavior Partly fulfills an employer s obligation to take reasonable steps to prevent harassment in the workplace under various laws Recommendations: Conduct harassment prevention training every two years and in the onboarding process for new hires. Train managers regarding their responsibilities to identify, prevent and address workplace harassment. 17 The Executive's Roadmap to Best-in-Class HR Strategy 2014 TriNet Group, Inc. All rights reserved.

Where to Begin Don t try to deal with everything at once. Review HR functions and identify potential gaps Focus on high risk areas Create a realistic timeline 19 The Executive's Roadmap to Best-in-Class HR Strategy 2014 TriNet Group, Inc. All rights reserved.

Summary Seek guidance from experienced TriNet professionals. Be consistent in development and implementation of policies. Create policies that fit your individual company situation. Standardize processes for hiring, onboarding and performance management. Implement appropriate training for managers and employees. Establish equitable pay practices using market data and clear, inclusive job descriptions. Document disciplinary and performance issues. 20 The Executive's Roadmap to Best-in-Class HR Strategy 2014 TriNet Group, Inc. All rights reserved.