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The people factor: fundamentals of human resources

You can't always do everything yourself. As your business grows, hiring employees may become more and more
important to your success. And the moment you hire, you become involved in human resources (HR).

Human resources is more than just recruiting, hiring, retaining, and terminating employees; it also involves the day
today management of the employees who contribute to producing the goods and services that your business
This article will highlight some of the key practices, laws, and regulations related to HR. But you should always
consult with your attorney, CPA, or business advisor for the most current details and guidelines before you act. Only
you and your advisors know the specific circumstances and needs that your company must address.
Are You Ready to Hire?
Taking the step to hire additional employees is a big one, since you will now be responsible for payroll, benefits,
unemployment insurance, maintaining a productive work environment, and a host of additional employeerelated
details. Therefore, it's important to make sure you are ready for these additional responsibilities.
Once you have made the decision to hire, be sure that a potential employee's skill set matches your business needs.
Among the characteristics to consider are:
Technical: the ability to perform the specific functions required for the job.
Communication: the ability to speak, write, and express oneself effectively.
Problemsolving: the ability to identify and solve businessrelated issues.
Human relations: the ability to use personal skills to resolve potential conflicts, to provide support for other
employees, and to be sensitive to feelings and situations.
Planning/organization: the ability to supervise, direct, and guide themselves and other employees to reach personal
and business goals and objectives; the ability to effectively plan and make efficient use of time.
Daytoday work skills: the ability to be punctual, to manage time efficiently, to cooperate with others, and to
accept responsibility all those items that create a successful work environment.
Alternative Options
The traditional option is to hire fulltime employees, although temporary, parttime, leasing, outsourcing, and
contracting arrangements may be considered.
Diversity in Your Workplace
Employees come from all walks of life and have many different personalities, abilities, and skill sets. Depending on
the nature of your business, you can probably benefit from expanding the diversity of your workforce as a way to
raise the effectiveness of its individuals and teams, meeting customer needs, and ultimately, improving your bottom
Employment Law
It is worthwhile to sit with your attorney, or other appropriate professionals, to explain your employment plan of action,
and have that person review with you the current laws and guidelines that have implications for you. It is your
responsibility to be aware of these laws and their meaning and to be cautious when you interview potential
employees. Some of the major employeerelated legal requirements are:
Equal Employment Opportunity Act: Prohibits discrimination in employment practices based on race, religion, sex,
or national origin.
Age Discrimination in Employment Act: Prohibits unfair hiring practices and treatment of employees based on
their age.
Americans with Disabilities Act (ADA): Prohibits discrimination against individuals with physical or mental
handicaps. This includes not only hiring practices, but also the design of the facility.
The Hiring Process
To ensure that your hiring process complies with all laws and best practices, make sure that you, your managers, or
your HR consultants follow these guidelines and consult with experts, as appropriate:
The Job Application
A job application provides you with critical information about the potential employee to aid in your hiring decision.
Keep all applications on file, as you never know when you might have additional employment needs in the future, and
to refer to in connection with employees' changing duties.
A comprehensive employment application elicits detailed information about the applicant's prior work experience,
special skills, and educational background. You may also wish to include a Background Check Release Form that
gives you permission to check references.
How you manage your employees plays a large role in retaining skilled and talented employees down the line.
Reviewing Applications
Because you probably will have multiple applicants, you need to establish a consistent review process for all
applicants. If you have other employees on the management team, you may want to have them participate in the
process and provide feedback.
PreEmployment Screening
Once you identify a promising applicant, it is typical to conduct a background and reference check; this process could
include calling references and previous employers, checking the applicant's work permit papers and requesting a
copy of the applicant's transcript to verify their education. Regardless of the size of your business, preemployment
screening is an important hiring practice to avoid costly hiring mistakes and possibly lawsuits. Your business may be
held liable for the actions of a new employee, especially if you did not conduct a background check.
The Interview
The objective of an interview is to find out as much relevant information as you can about an applicant. In order to
keep the interview focused, prepare written questions and document the answers. Ask questions that will allow
applicants to talk about themselves, their work habits, their experiences, and their skills. As you conduct your
interview, be sure that you keep all applicable laws in mind, and steer clear of any personal questions.
Making an Offer
Once you identify the right employee, make a job offer in writing, being careful not to promise something you cannot
deliver. Also, be sure to followup promptly with those applicants you didn't select. Even though an applicant doesn't
fit a present need, you may have future needs that might suit them and it is helpful for them to see the respect your
business shows all applicants.
Preparing New Hires for Success
To start new employees off right, consider the following practices:
Employment Paperwork
A formal employment orientation program usually consists of a presentation and discussion about the rules, policies,
and operational procedures of the business, and an Employment Agreement Form indicating the employee has read
and understood them. There is also the standard employment paperwork, such as IRS Form W4, Form I 9, and an
Emergency Notification form.
Your employees are a critical component of your success. A loyal, highly productive workforce can be a competitive
tool that enables you to build your business.
If you are hiring only a few new employees, you may not necessarily need a formal employment orientation program;
however, it is good business practice to have a process for providing all new employees with important information
regarding your business such as your company's mission, products and services.
Do everything possible to start new employees off on the right track. Designate a period of time for proper training of
the employee for his or her new role. This can eliminate frustration, provide feedback to the new employee, and
prevent misunderstandings. Clearly explain to your new employees any mandatory and additional training programs,
compensation arrangements, and performance expectations.
Employee Handbook
To ensure that your employees understand and follow operational procedures and policies, you may choose to have
written guidelines which could either be in a simple document or a more formal Employee Handbook. These
guidelines should be easy to follow and kept up to date.
Retention and Motivation Programs
How you manage your employees plays a large role in retaining skilled and talented employees down the line. Yes,
benefits are important and critical, but if you are going to have employees, you must strive to establish an
environment where employees can grow, thrive, and be challenged.
Employee recognition can range from a simple pat on the back to a more elaborate "Employee of the Month"
program, staff meeting announcements, special parking spots, etc. As your business grows, you may also want to
consider bonus plans, 401(k) plans, profitsharing, and stock options.
Employee Benefits
By law, you must provide certain mandated benefits, but you have many options when providing optional benefits for
your employees.
Mandated Benefits
As an employer, you must pay in full or in part for certain legally mandated benefits and insurance coverage, such as
Social Security, Unemployment Insurance, and Workers' Compensation.
Optional Benefits
Although the basic package of employment benefits may include insurance (health, disability, and life), retirement
plans, compensation, and paid leave (sick, vacation, and maternity leave), it can also be expanded to include a
variety of leave options, bonuses, service awards, and even financial support for additional education and training,
etc. Additional benefits like these can be costly, but may be better for your business in the long run because they can
help you retain employees.
Ending Employment
There are many reasons why employees may leave your company. The most common are:
Retirement An employee concludes many years of productive work and chooses to relax to enjoy the fruits of his
or her labor.
Resigning An employee may decide to leave for other employment, to move to a new location, or because they
are unhappy in the current job.
Layoffs/Downsizing There may be times when the best decision is to reduce your workforce to main-tain the
financial health of your business. An important key to a successful reduction in workforce is to provide adequate
compensation to impacted employees, if possible, based on skill and experience.
Performance When an employee performs poorly in his or her role or violates the policies and guidelines of the
business, termination may be necessary. Make sure that the situation is handled professionally, with full
documentation. And consider using an exit interview as a way to bring closure to the relationship.
Managing For Success
Your employees are a critical component of your success. A loyal, highly productive workforce can be a competitive
tool that enables you to build your business.
Your Citibank Business Specialist can assist you with banking services, including payroll processing and personal
banking services for your employees, to help you manage your human resources function. For additional information,
visit us at

Citibank and its employees are not in the business of providing tax or legal advice. This newsletter and any tax
related statements are not intended or written to be used, and cannot be used or relied upon, by any taxpayer for the
purpose of avoiding tax penalties or for tax planning purposes, or as legal advice for any particular situation by any
particular person or business. Any such taxpayer should seek advice based on the taxpayer's particular
circumstances from an independent tax advisor and/or attorney. This article summarizes certain general laws and
regulations that apply to small businesses and is not intended to be and should not be relied upon for legal advice.
You should seek the advice of qualified legal and tax advisors to ensure that your business is conducted in
accordance with applicable legal requirements.
Many Citibank products and services can help you with your business's banking needs. For further information,
including any applicable fees and conditions , see your Citibank representative for details.