What's a 'Day's Work'?

May 2010

"We have a rule that says employees have to work the day before and after a holiday to get paid for the day off. So now a bunch of people come in Friday morning, put in a few hours, and leave at lunchtime. I know I'm being picky, but is there a formal definition of a 'working day'?"

Mike: Small, early stage companies typically have unwritten, ill-defined HR policies and practices. Once you add a few employees, issues like this begin to pop up. You need to address this problem--and others like it--with a formal employee handbook. It's not really an accounting issue.

But rules are only part of the solution. You also need to make sure your employees feel a sense of responsibility for the company's success.

Many years ago, I happened to drop in to the office late Saturday evening to pick up some papers. I saw lights on in the clerical area, and found one of our admins typing a big document. When I asked, she said she was working on a proposal, and if the proposal was successful there would be a good chunk of work for all of us. She was the lowest paid person at the company, but she absolutely had the best attitude. If you have highly-motivated employees like her, you won't have to worry about when they punch the time clock.

Should I run a credit check on veteran employees?

November 2009

"My new CFO thinks we should run a credit check on all our employees, even ones who have worked here for several years. Can you give me a reality check on this idea?"

Mike: Don't go there. The Fair Credit Reporting Act permits businesses to obtain credit reports for a “permissible purpose,” which typically means taking out a loan or making a large consumer purchase on extended terms. You can usually justify a credit check for someone you're considering hiring, but the Act requires you to get permission from the applicant (or any current employees) before soliciting this information.

Since your employees will have to agree to let you run credit checks, you should be ready with a good explanation of why you're invading their privacy. If there's nothing you plan to do with their credit scores, you'll be creating a mini-crisis for no good reason. Why bother?

Should we bother with performance reviews?

November 2009

"We've decided to freeze all salaries for next year, and my employees are now asking if there's any point to performance reviews in this situation. I don't have a good answer."

Mike: Ideally, a performance review should be a discussion about an employee's performance, not about raises and bonuses. Go ahead and talk with your employees about their strengths and weaknesses, emphasizing that the company needs everyone to be extra effective during tough economic times. Their payoff will come when the company returns to profitability.

Of course, there will always be a few employees who feel entitled to goof off if there's no gold at the end of the rainbow. Use your performance reviews as a tool to identify who should be at the top of the list if you go through a round of layoffs. These days, just having a job is its own reward.