High Performance HR - Maximize People for Profits - ADOMA July 2016

The People Profit Connection

It cost $10,000 on average to replace an employee

Automotive News reports 70% turnover is common in dealerships

20,000 Service Tech needed in next 10 year

The average legal cost to defend an employment lawsuits is $50,000

1

Workforce Management Drivers

Workforce Management

Business Strategy

Compliance

–

EEOC Charge – Retaliation

3

$50,000 Settlement

Disability Discrimination

4– KPA CONFIDENTIAL –

$50,000 Settlement

Retaliation


$85,000 Settlement

$140,000 Racial Harassment Settlement

6

$140,000 Settlement

EEOC Charge – “I am the Dictator”

7

$400,000 Settlement

$1.5m Discrimination Suit Settlement

8

$1.5 Million Settlement

Wage and Hour


$450,000

Flag and Flat Rate Payment Problems

10

Employee Classification

11–

Exempt vs Non Exempt

Exempt employee do not receive overtime. They are paid for the job they do, not the hours they work. “Guaranteed salary”.

Non exempt employee must be paid for all hours worked and depending on the position and the business of the employer they may be entitled to overtime. “Hours paid for hours worked”

What Changed

• Exemption from Overtime = $47,476 ($913 per week)

More than $455 but less than $913 will need to be reclassified

• No changes to duties test

• 3 year increases

• Ability to include bonuses, commissions and incentive payments

– 10% of total compensation for non- highly compensated employees if the incentive payments are made at least on a quarterly basis

Avoiding Overtime, Fines and Penalties

• Increase salaries (still must meet the duties test)

• Decrease bonuses for those employees whose overall

compensation exceeds the new minimum. Increase salary by

bonus amount

• Reclassify exempt employees as non-exempt and pay hourly.

• Increase staffing levels to eliminate excessive overtime

The BAD news is that all of these option will require most employers

to spend more money on wage payments

The GOOD news is that you will be in compliance and will not be

subject to lawsuits, fines and penalties.

Federal Exemptions

MINIMUM WAGE/ OVERTIME/ RECORDS

• Executive

• Administrative

• Professional

– Creative

– Computer Relegated

• Highly Compensated

OVERTIME ONLY Dealership Specific

• Salesman

• Partsman

• Mechanic

• Commission-paidThe FLSA also has an exemption from the overtime pay

requirements for certain commission employees of a

retail or service establishment. For this exemption to

apply, three requirements must be met: (1) The employee

must be employed by a retail or service establishment;

(2) The employee’s regular rate of pay must exceed one

and one half times the applicable minimum wage; and (3)

more than half of the employee’s total earnings in a

representative period must consist of commissions on

goods and services.

Three Factors

1. How is the employee paid?2. How much is the employee paid?3. What does the employee do?

• The employee must be paid a salary, must make a minimum of $913 per week/ $47,476 per year and must meet all of the qualification of one of the duties test to be classified as exempt if using the Executive, Administrative or Professional duties test.

• Highly Compensated employee must perform at least one exempt duties of an Executive, Administrative or Professional employee to be exempt.

Irrelevant Factors

• Employee is paid a salary- unless meets other

factors for total compensation and duties test

• “We consider employee a manager”

• Employee could supervise someone,

sometimes

• “When employee was hired, we agreed no

overtime would be due”

• “We give them comp time when they work over

40 hours”

Wage and Hour Consideration

• You can pay commissions weekly, bi-

weekly, semi-monthly or monthly.

• You must satisfy minimum wage on the

same basis: weekly, bi-weekly, semi-monthly

or monthly

• You can “loan” or advance a sales person

money to cover the minimum wage and then

recoup it in subsequent weeks or months

• You must pay for all hours worked: sales

meetings, off day deliveries, prospecting, etc.

Hire, Retain, Engage

-– KPA CONFIDENTIAL –

Engage

Retain

HireSelect the best because you have a choice

Keep the best with a good working environment

Engage to maximize productivity

Eliminate Revolving Door Hiring


The Five Tools

Effective Application

Behavioral Interview

Reference Checking

Background Checking

Candidate Scorecard


The Five Habits

Follow a defined process

Use the five tools

Always be recruiting

Include others in the process

Never talk yourself into saying yes


Satisfied and Engaged Employees

engagement

Engaged Employees

Employees align what they want — and what the business needs— and then take action to achieve both


Ownership

Clarity

Action

Engaged Managers

Managers understand each employees talents and skills and match to the businesses objectives — while at the same time creating personal, trusting relationships


Coaching

Relationships

Dialague

Engaged Executives

Executives demonstrate consistency in words and actions, communicate a lot, and align business practices and behaviors throughout the organization to drive results andengagement.


Trust

Communication

Culture

Four Generations At Work


Silents (Born between

1925 and 1946)

Baby Boomers (Born

between 1946 and 1964)

Generation Xers (Born

between 1965 and 1980)

Generation Ys or

Millennials (born after

1980)

This Doesn’t Work Anymore

Not that it every really did!

HR Management Systems

• *Forrester Research

Efficiency

Compliance/

Legal Risk

Communications

Necessity

Only 45% of

employees feel they

receive adequate

information and

communication for

HR and managers

Paper based

communications

results ion 40% error

rate compared to 5%

for electronic

exchanges

50% of HR time is

spent in answering

questions and

transactions

FLSA, FCRA, FMLA,

OSHA, EEO, ADA,

FICA, FUTA, ADEA,

ACA….

Dealership Case Study

Issues

• Paper Based Processes,

multiple systems of record

• Inconsistent Application of

Regulatory Requirements/

Company Policy

• Limited access to key

reports/metrics

Key Benefits• Improved efficiency and

reduction in data errors

• Reduction in legal exposure and improved employee relations

• Permission based access and reporting functionality relieved signficant reporting burden on HR

Client Profile- 3 locations, 220 employee

Dealership Case Study

Issues

• Limited HR resources

• Multiple system access to key

reports/metrics

• High turnover

Key Benefits• Effective delivery of basic HR

services allowed internal staff to focus on strategic issues including new benefit program that resulted in cost savings of $80K

• Permission based access and reporting functionality relieved signficant reporting burden on HR

• Reduced turnover from 57% to 35% in first 18 months. Cost savings estimated at $113K

Client Profile- 9 locations, 897 employee

Effective Workforce Management

Successful

HR Operations

Documented Processes

Accurate and Complete

Employee Files

Effective Recruiting and

Retention

Performance Management

Programs

Training and Communications

Meets All Legal Requirements


Key Performance Indicators

• Employee Costs

• Employee Turnover/Retention

• Absences

• Workplace Compliance


Questions and Answers


QUESTIONS?

Contact Information

35

Kathryn Carlson

[email protected]

Software

High Performance HR - Maximize People for Profits - ADOMA July 2016