You know who you are – the multi-unit franchise owner who may still face the conflicts between working “on” or “in” the business. You’re not alone — this happens in franchises of all sizes. The temptation to continue to work in the business may be a big one, regardless of the number of units owned.
Particularly for multi-unit owners, though, the need to focus on developing strategies and growing revenue (working on your business) should take precedence over day-to-day issues related to human resources administration (working in your business). That includes HR issues like workers’ compensation, risk management, payroll and payroll reporting, unemployment claims, employee benefits, employee onboarding, employee retention – and more.
Hiring specialists in each of these areas is not cost effective or particularly successful, particularly with multi-unit and multi-state operations. Most multi-unit franchise owners prefer to stick with a flat or lean management team, rather than loading up on overhead costs.
But regardless of how you handle HR administration, it’s important to start with the what. Which are the most critical HR issues you should handle to maximize profitability, minimize liability, adhere to appropriate regulations and attract/retain the best employees?
Let’s briefly discuss these top HR issues and some options for the most cost-efficient ways to take care of them.
What to know about workers’ comp costs and risk management
Workers’ compensation is often top of mind for multi-unit franchise owners, as on the job injuries can wreak havoc for the best run franchise operations. Owners know they need workers’ comp coverage, but may assume all rates are created equal. That’s not the case. Rates, while set by states, are also based on the size of the operation and eligibility for discounts based on a documented safety program or drug free workplace. The most important factor, though, is the loss history and ability to qualify for an experience modifier.
But there’s more to it – and that’s premium costs. A combination of safety training and audits, creation of a safe work environment and enforcement of safety rules, as well as a wise selection of carriers, can make a difference in premium costs.
What about payroll and payroll reporting?
It’s only after your franchise starts doing its own multi-unit payroll that you realize how time consuming it is, along with the risks and minefields that await you with reporting and compliance. This is not a clerical function. Payroll is way more than just cutting checks – it’s also the time spent compiling time-sheets, checking pay rates and verifying deductions and garnishments. And that’s before reporting, fines for late reporting and the many regulations imposed on businesses.
No franchisee can really avoid unemployment claims, because former employees are always free to file claims. However, the right approaches, particularly in high turnover franchises, can minimize the number of claims and maximize franchisees’ ability to defend themselves against claims that have been filed.
Most unemployment claims are based on disagreements about employee performance, attendance or conduct. Additional but less frequent reasons for claims include layoffs and reduction in employee hours. Best practices to avoid these include:
- Hire the best qualified people, performing background checks, using job descriptions and thorough onboarding
- Establish written policies/procedures
- Provide training
- Perform regular reviews, counsel on deficiencies and document files
As for claims, although the burden of proof is on the employer, employees are less likely to win a claim for termination for conduct or attendance if the employer has ample documentation.
And so much more…
Although workers’ comp, risk management, payroll, payroll reporting and unemployment claims may be at the top of the multi-unit franchisee’s list, they are often just the tip of the HR iceberg. No owner can perform all the HR functions alone and few want to bear the expense of hiring individual specialists. Some franchisees choose to outsource to multiple vendors, but there’s another option.
That option, the Professional Employer Organization (PEO), offers a one-stop shop approach, with all of these services under one roof, with one partner. Choosing the right Professional Employer Organization (http://www.frankcrum.com/peo-services/) allows franchisees to work with dedicated professional team members in each service area. The right PEO will also provide these services at an affordable cost, which is often less than what other multi-unit franchisees are paying staff members and/or multiple vendors.
It’s not practical to hire all the help you need and you know you didn’t start your franchise to become an HR specialist. When you achieve the efficiencies of outsourcing, you can control costs and gain more time for sales and marketing. This, in turn, will allow you to focus on building your franchises, and we’d say that’s a pretty good recipe for success.
Ashley Jeffery is a Business Consultant for FrankCrum, a national Professional Employer Organization with experience working with single and multi-unit franchisees. Working directly with business owners to help them improve their business operations, she offers ways to reduce costs by outsourcing HR.