Mark: Hi there, how are you doing?
Mark: Enjoy breakfast? I was enjoying mine just a moment ago. Oh, boy! I want to talk to you a little bit today about employees. Employees are probably the biggest asset that a company has or a business could have. Unfortunately, employees in the state of California are also the biggest liability that a company or a business has. For those who don’t take care to properly frame the relationship with their employees, well, woe unto you. You will have many, many problems that will detract from you being able to do your business. All of the things that I do as a business lawyer are designed to allow you to focus on doing your business rather than worrying about things like litigation or fighting with employees, or third parties, or whatever, right? You want to make money. You don’t want to lose a lot of money basically fighting.
By properly framing the relationship with your employees you can take away a huge headache that many employers otherwise might have. How do we do that? Well, about eight years ago someone came to me and partners at the firm I was with at the time and said, “We need a whole package for how to deal with employees.” Essentially, the whole idea was how do we come up with something that deals with employees from the moment they enter the premises or send in an application, right, to the moment that they finally leave you after termination?
The initial thought was, “Well, we’ll just sit down and we’ll customize a package for each employer.” We figured out how much that would cost and that was a little bit between 10 and $15,000. That just seemed to me, to be insane. So I said, “Why can’t we just systematize this? Why can’t we just make this so that essentially you cover about 95, 97% of all of the stuff that needs to be covered and you do it in a very systematic way, and you tailor it for smaller employers who have less than 50 employees.” Those are the ones that we’re going to be targeting for the most part anyway and so we came up with this package.
If you look at your handout, you’ll see that that’s essentially the package that we developed and have been using ever since. It really does cover the entire relationship, what you call cradle the grave or whatever else you want to toss up, the relationship or the extent of it. It basically starts with the moment that employees might become your employees and most people don’t really appreciate that because essentially until you’re in a discrimination suit based on somebody suing you for not hiring them, you really don’t understand how important an application can be. This is why we start with the application. We go through offers. We go through the orientation. Everybody’s familiar with an Employee Handbook, right?
Mark: That covers about 60%. If you have a proper Employee Handbook, that covers about 60% of the issues that you have to deal with. The other thing is performance. Once they’re working for you, how do you deal with them? When I was working for the Army and Air Force Exchange Service, they had a great performance evaluation. They had basically four different categories and under each one they had a number one at one end and a number five at the other end. What you were supposed to do is basically pick a number between one and five for each category and that was the performance review for the employee. How effective do you think that was? Really not. It was weird because of the institutional mentality. Most people said, “Nobody ever gets a five.” So everybody always ended up kind of fair, kind of in between. Didn’t make any sense, all right?
Here’s the important part. Nobody ever got any communication about one, what they’re doing right and two, what they might need to do to improve at their job, and you see that’s what we incorporate into this system. It’s because of the forms we use, you have to start having that dialogue. It’s not just, “Oh, I think you’re great. We’ll give you another 10% increase in salary, right, get back to work.” Right? That’s not very effective and I find people who deal with their employees that way have huge problems.
When I talk about problems, I’m talking about labor and wage claims. I’m talking about high turnover. I’m talking about lawsuits, right? These are not good things. Anybody here who gave me an estimate how much the average employment lawsuit costs the business these days?
Mark: Way low.
Male: Oh, man!
Mark: It’s about $150,000. So if you don’t think this is a very serious liability, you have to think again because if you get stuck with one of these lawsuits, it could take you down if you’re a small business. Why? Because you’re going to have to pay an attorney to defend you. So this is very serious stuff. With that in mind, I really, really do exort you to start to look at the relationship that you have with your employees.
Now, I have the honor of working with Val [inaudible 00:05:47], all right? Val is a very meticulous person. She basically has really thought about all of the aspects of her relationships with her employees and she’s written them all down. She has got a handbook that’s what, 90 pages long. It’s amazing. It is just an absolutely amazing piece of work. Why? Because she really thinks about all of the things that happen between her and employees, and she wants to have them all written down. That’s a good thing. Overkill is never a bad things, right? But that may not apply to you. You may not have that many interactions. She has a very complex business, right? She has mechanics who deal with the public and deal with all different kinds of things that a lot of employees and employers never come into contact with.
This is something that you should sit down and talk about because it will help you have a better relationship with your employees. How many people want employees to be happy? You know what the biggest source of unhappiness from employees is with respect to their employers?
Male: Performance reviews.
Male: Not knowing what their job is clearly.
Mark: That’s part of it. It’s even bigger. It’s just direct communication. They don’t have any direct communication on any relevant topic with their employers and it really frustrates them. I think if you take a look at what we put together for what we do, right, it does open up those channels so that essentially employees and employers do start to have those types of interactions, and they are a lot more positive. They result in less disputes, less complaints, better and happier employees, no lawsuits, very important, right? Here’s the best part, right? Hopefully, a more profitable business because that’s really what it’s all about.
Now, I mentioned that we had estimated that this would all cost about 10 to $15,000 to put together for each business. How much do you think I charge to do this?
Mark: $1500. Yes, somebody paid attention to the . . . I’m one of the few people in my business that do these things on a flat-fee basis. Why? Because I want to make sure that the people I’m dealing with is usually for the first time have a very positive experience and they’re not worried about the time ticking away on the clock and how much it’s costing them. Rather, I’d like them to focus on making sure they get a good product together and a good relationship set up with their employees. If we do that, then we’ve got half the battle won, don’t we? Yes, Val.
Val: If I could just add to that, I think that your services are an excellent value. I do have an HR service that I had contracted through compared to what [inaudible 00:08:34] on a yearly basis, to what Mark is providing me and he’s much more thorough, and I have [inaudible 00:08:40].
Mark: I appreciate that. One of the things that we do try to do and this is probably something that only lawyers do is, we really try to keep you out of the court system. One of the really important parts of this whole package we put together is the agreement at every stage, right, that any disputes be arbitrated. That in itself saves a huge amount of expense and in many cases will save you from a lawsuit. So if you’re interested or if you know people who have employees who don’t have this type of system in place or if they’re having a lot of frustration or anger over their relationship with their employees, then they can come in and have a cup of coffee with me and I’ll be happy to help them get back on track and become a lot more profitable as a business. That’s all I got. Any other questions? Yay!