Every HR Decision is a
Business Decision
by
Becky Stauffer, MPA, SPHR
Penn-Mar Human Services
Why building collaborative relationships between HR,
Managers and Executives will minimize business
exposure; so your company can save money, make
money, improve processes and procedures and reach
your mission.
Penn-Mar Human Services
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$24M Organization, 501(c)3
500 Employees
200+ Adults with Cognitive and Intellectual
Disabilities served.
Residential, Vocational, Therapeutic Day,
Community Vocational Placement, Respite, InHome Supports, Transportation, Life-Sharing,
LISS
50 locations, 2 States.
$1 M Production
Business Advisory Role:
 Employee
Departures (Terminations,
Resignations)
 Employee Injuries (Zero Losses, Lost
Time, Injury Management)
 Accommodations (ADA, Light Duty,
Leaves)
 Consult on Investigations
 Disciplinary Actions
 Hiring
Getting to know you…
Game Time
 You
should have a single die
 You should have a game board
 When you get to role the dice you count
only the sixes
 Roll


the dice now
If you got a six put a 1 in square 1
If you got any other number put a 0 in square 1
Is this your office?

Is this your office?

Is your HR/Management
relationship broken?
Management PERCEPTION
Including the HR
Department in meetings
is not beneficial “HR
always tells me no!”
HR is solely focused on
Compliance, Rules and
Regulations.
HR fails to understand the
mission of the
organization.
HR PERCEPTION
Managers keep making
the same mistakes!
Management allows “bad
behavior” as long as
the mission is
accomplished.
Management fails to
understand how their
actions create legal
exposure.
Is this your office?
Yes- Roll the die 4 times
 Put the number of 6s in square 2.
Sometimes- Roll the die 2 times
 Put the number of 6s in square 2.
Square 2:
No
 put a “0” in square 2.
Successful Management-HR
Relationships
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Management has clearly articulated the mission of the
organization and current strategic plan.
HR clearly understands management’s needs, wants
and objectives.
Management recognizes that people are the primary
business exposure and managing people issues are
critical to organizational success.
HR has the knowledge, skills and abilities to act as a
“business advisor”.
Management uses HR as a business advisor to access
risk and develop exposure mitigation and avoidance
strategies.
Innovative Thought:
Every HR decision is a business decision…
My role as an “HR Professional” is to
advise/consult with Managers and
Executives about the risks costs and
exposures of their decisions, actions and
inactions.
People are your greatest risk!
“I am convinced that the underlying cause of
virtually every loss is human error
somewhere within the system.
Unfortunately, most which can be laid right
at the feet of management.”

Donald Norris of Norris & Associates
Cost of People
2/3 of
business costs
are employee
related!
How can HR “help”
Management make “better”
organizational decisions?
Risk Management
The technique or profession of assessing,
minimizing, and preventing accidental loss
to a business, as through the use of
insurance, safety measures, etc.
What risks should you spend the
most time, energy, resources on?
Severity (Dollars)
Motor Vehicle
Accidents
Dog bites
Unemploy
ment comp
claims
Frequency (How often the exposure occurs)
Slips, Trips
and Falls
Taking away doughnuts
on pay day
What are the
4 types of losses your Organization
could suffer?
Types of Losses
 Economic
 Reputation


Internal Reputation
External Reputation
Square 3:
 Physical
 Time
Roll the die once for every one
you couldn’t list!
Where does the
“Business Risk” come from?
 List
3 types of “People Disasters?”
Common Understanding of 3 Major
Risk Areas.

Product Liability claims: improper design, materials,
construction, operation and/or maintenance. (Toyota)

Director's & Officer's Errors and Omissions claims:
someone was negligent or failed to pursue due diligence.
(Enron)
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Employment Practices Liability: improper selection,
training, coaching; policy & procedure development;
ignoring employee complaints of harassment or
discrimination; arbitrary termination procedures.
Toyota- Product Liability

Employee Errors Were the Root Cause
BusinessWeek estimates that Toyota is losing $155 million
per week as a result of their recent recall and in the
weeks leading up to this article Toyota had lost nearly
$30 billion in stock valuation. The long-term impacts of
the root causes that led to Toyota’s current situation
could cost the company hundreds of billions of dollars.
When the organization disproportionately rewarded
managers for cost-containment versus sustaining
product quality, it created the incentive for everyone
involved to ignore the facts and to deny that a problem
existed.
 Red
All you can eat,
gone wrong…
Directors’ and Officers’
Lobster's chief is ousted after a crab
promotion loses money.
 The company's stock closed at $18.75,
down $2.62, the biggest drop in seven
months.
Employment Liability
 Give
some examples:
Types of HR exposure
 EEOC
Claim- 17% of claims accepted
average cost $16,500 and in 2010 there
was a 70% increase in claims
 Unemployment Claim: $8,000
 Worker’s Comp/Employee Injuries $7,000*
 Turnover – Estimated at 25% of the
annual salary
 Wage and Hour claims
 Union Organizing
Do you know the difference
between “Administrative”
Employees?
Administrative Employee #1
Administrative Employee #2
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The employee who makes
$455 per week;
The employee’s primary duty
must be the performance of
office or non-manual work
directly related to the
management or general
business operations of the
employer or the employer’s
customers; and
The employee’s primary duty
includes the exercise of
discretion and independent
judgment with respect to
matters of significance.
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Performs administrative and
office support activities for
multiple supervisors.
Duties may include fielding
telephone calls, receiving and
directing visitors, word
processing, filing, and faxing.
Extensive software skills are
required, as well as Internet
research abilities and strong
communication skills.
Staff in this category also may
have the title of department
assistant, coordinator, or
associate.
Did you know the difference?
No- Roll the die 4 times
 Put the number of 6s in square 2.
Yes
 put a “0” in square 2.
Warning !
Under FLSA LPNs should be Hourly
(Non-Exempt) not Salaried (Exempt)
Square 4:
FLSA- HUGE EXPOSURE
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A cursory running of the numbers goes like this:
1. An employer misclassifies three jobs and pays no overtime for three years.
2. The employees each work an average of two hours of overtime per week
and frequently work through lunch.
3. The employer retains no time records for the employees.
4. The average rate of pay for each employee is approximately $35,000 per
year. Three employees multiplied by 2.5 hours per week, multiplied by 156
weeks, equals 1,170 hours of overtime. At a rate of approximately $25 per
hour for overtime, that’s $29,250.
Double that total for liquidated damages, and you’re at nearly $60,000. And
don’t forget the employees’ attorneys’ fees (at least $30,000) plus a similar
defense cost, and you’re quickly approaching $120,000 — all for
misclassifying three employees.
What to do about Exposures?
(an issue, a problem, identified risk)
 Acceptance
 Avoidance
 Modification
 Transfer
or sharing
Acceptance
 Some
risky activities are central to the
mission of an organization and an
organization will choose to accept the
risks.
Avoidance
 Stop
providing the service or doing the
activity because it is too risky.
Modification/Mitigation
 Change
the activity to reduce the
likelihood of the risk occurring or reduce
the severity of the consequences.

Policies and procedures are an important part
of this risk management strategy because
they communicate expectations and define
boundaries.
Transfer or sharing
 Purchase
insurance or transfer the risk to
another organization through signing a
contractual agreement with other
organizations to share the risk (for
example, having a contractual agreement
with a bus company to transport clients
rather than staff driving clients).
Do you have an Employee
Handbook/Personnel Policy
Manual?
If you’ve opened your Employee Handbook or
Personnel Manual in the last week – Do not roll.
If you’ve never read your Personnel Manual – Roll
4 times
If you don’t have a copy on your desk or within
arm’s reach – Roll 4 times
If your company doesn’t have one – Roll 8 times
Square 5:
Management must define when an
issue is business worthy…
 What’s
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your CEO/COO’s threshold?
$250,000
$100,000
$25,000
 What
is your Program Manager’s
threshold?
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
$10,000
$5,000
 What’s
your threshold?
What’s the cost of a
termination?
 An
hourly employee making $10.00 hour
works for our company for a year…

We can’t meet the “willful misconduct
standard”… how much will it cost our
company?
A) $2,000
B) $5,000
C) $8,000
D) $11,000
E) $24,000
Is it an “acceptable risk” to fire
Fred?
 The
problem of differing standards…
Employment at Will v. Willful Misconduct
CONFLICT!
Management Understanding
of Legal Termination

an employment relationship is
one in which either party can
break the relationship with no
liability, provided there was no
express contract for a definite
term governing the
employment relationship and
that the employer does not
belong to a collective
bargaining group.
HR Understanding of Legal
Termination

an act of wanton or willful
disregard of the employer’s
interests, a deliberate violation
of the employer’s rules, a
disregard of the standards of
behavior which the employer
has a right to expect of an
employee, or negligence
indicating an intentional
disregard of the employer’s
interests or of the employee’s
duties and obligations to the
employer.
Unemployment Comp Hearing
If you’ve…

Ever served as the non-legal advocate for your organization. 0
rolls
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Ever been a witness in a case where you have won an
Unemployment Compensation Hearing. 0 rolls
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Never been to an Unemployment Compensation hearing. 2 rolls
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never been to an Unemployment Compensation hearing
because your company just accepts claims a part of doing
business. 5 rolls
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Other 1 roll
Square 6
Flip flops
Time for a Role Play !
HR Sample Script
-What to do about Exposure
(an issue, a problem)?

(Acknowledge) Define the problem
 (Define Cost) Our annual worker’s comp
premium is ____
 (Define Cost) The average cost of an injury is__
 (Exposure) Slips, trips and falls is one of the four
leading causes of employee injury, last
year____ employees were injured, resulting in
_______ OSHA recordables, _________ lost
days, ________ days on restriction.
Management Script

How does this issue create exposure?

Economic, Reputation, Physical and/or Time
What’s the cost associated with this (a single) exposure?
 What costs have we already incurred over the last year,
5 years?
 What’s the likelihood of multiple exposures?
 What’s the worst case scenario?
 What’s the best case scenario?
 What are we going to do about it?
 Is the cost of fixing the problem more than the exposure?
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Management:
What do you want to choose?
 Acceptance
 Avoidance
 Modification
 Transfer
or Sharing
“People who bring problems, should also
be bringing solutions.”
EEOC Claims
 For
the six months that ended April 30,
(2010) more than 70,000 people filed
claims with the Equal Employment
Opportunity Commission saying they had
suffered job discrimination, a 60%
increase in bias claims compared with the
same period a year earlier. Not all of these
complainants will sue, but plenty will.
We’ve got a problem with
workplace violence…
OSHA says…
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Workplace violence is any act or threat of physical violence,
harassment, intimidation, or other threatening disruptive behavior
that occurs at the work site. It ranges from threats and verbal abuse
to physical assaults and even homicide.
One of the best protections employers can offer their workers is to
establish a zero-tolerance policy toward workplace violence.
This policy should cover all workers, patients, clients, visitors,
contractors, and anyone else who may come in contact with
company personnel
Among those with higher risk are workers who exchange money
with the public, delivery drivers, healthcare professionals, public
service workers, customer service agents, law enforcement
personnel, and those who work alone or in small groups.
http://www.osha.gov/SLTC/workplaceviolence/
What can we do?
 Acceptance
 Avoidance
 Modification/Mitigation
 Transfer
or Sharing
What’s Acceptable exposure?
Are willing to Avoid the exposure?

At what level of exposure can you/will you justify “not
providing” services to an individual?
What can we do to Modify or
Mitigate the exposure?
Work in teams
 10
minutes to come up with best ideas to
mitigate this exposure…
How can we Mitigate/Modify?
Use HR not only for current
exposures but future risk/reward!
 Multiple
department facilitation
 Rewards
 Employee Engagement
 Expansion, Mergers and Acquisitions
 Downsizing
 New Program Initiatives
 Gap Analyses
Successful Management-HR
Relationships
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Management has clearly articulated the mission of the
organization and current strategic plan
HR clearly understands management’s needs, wants
and objectives.
Management recognizes that people are the primary
business exposure and managing people issues are
critical to organizational success
HR has the knowledge, skills and abilities to act as a
“business advisor”.
Management uses HR as a business advisor to access
risk and develop exposure mitigation strategies.
Parting thoughts:
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If you offend people they won’t listen to you!
Don’t throw people under the bus.
Build political capital
You want to know about internal problems and
complaints. (Employees don’t have to use chain of
command.)
If you have a problem that you can’t resolve, think about
it some more.
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Look outside the organization for solutions
Take Management to a UC hearing!
If your CFO has a CPA, why doesn’t your HR
Professional have a PHR or SPHR?
Contact Information:
Becky Stauffer, SPHR
Director of Human Resources
Penn-Mar Human Services
10709 Susquehanna Trial
Glen Rock PA 17327
bstauffer@penn-mar.org
Referenced Articles:
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http://www.litigationandtrial.com/2010/09/articles/trial/news/the-rising-tide-of-employment-discrimination-claimswont-lift-most-boats
http://www.sptimes.com/2003/09/26/State/All_you_can_eat_was_t.shtml
http://www.ere.net/2010/02/15/a-think-piece-how-hr-caused-toyota-to-crash/
http://www.dol.gov/whd/regs/compliance/fairpay/fs17c_administrative.pdf
http://www.hrhero.com/hl/articles/2008/06/27/overtime-and-wage-lawsuits-potential-liability-for-mostemployers/?TOPIC
http://www.lexisnexis.com/community/workerscompensationlaw/blogs/newsheadlines/archive/2010/02/10/pa_3a00
_-workers_1920_-comp-costs-per-claimgrew.aspx