Does your firm’s people advisory services include HR analysis tools?
Employee turnover can be a serious problem for small businesses. Without proper human resources advice, your small business clients could struggle with turnover. As people advisors, your firm is in a unique position to provide the support your clients need by expanding your consulting services into the realm of HR. This expansion gives your small business clients the HR backup they need while growing the number of value-added services your firm provides.
Gusto believes that people advisory is the future of accounting, and an essential part of people advising is providing human resource reporting options to clients. That’s why we have partnered with our friends at CPA Academy to bring you the webinar, “Getting Started With HR Advisory Services.” This edifying webinar takes a look at how you can provide a critical HR support tool for your clients.
The leader of this webinar is Gusto’s own, Caleb Newquist. Currently, he is the Editor-at-Large at Gusto. He was also the founding editor of Going Concern, an informative resource for accountants looking for news and advice in the profession. Additionally, Caleb worked as an active CPA for nearly six years in New York and Denver.
This article details different HR analysis methods and how to track vital human resources statistics such as cost per hire, absentee and overtime rates, and employee turnover. The article offers plenty of information to prepare you for offering necessary human resources advice to your clients.
Choose the right fit for your clients
Each of your clients is unique, so the analysis methods you use for one client may not work for another. Factors like business size, number of employees, and type of industry all influence how you should evaluate the HR performances of your clients’ companies. Before offering human resources advice to your customers, be sure to understand their specific needs.
“The way you package [analysis methods] and the way you offer them will be totally up to you. Some things may not be relevant, [so you must determine] how you offer these services, who you offer them to, and who’s interested in them.”
– Caleb Newquist
Tailoring your HR analysis methods to specific clients will ensure you are providing the highest level of services possible. As you build your HR service packages, remember to keep the clients’ needs at the forefront of your offerings, and only provide services your firm is comfortable with offering.
Cost per hire analysis
When analyzing a client’s cost per hire, there are two important categories to consider—out-of-pocket costs and employee time.
Out-of-pocket costs are what your client spends as an expense to the company when adding a new member to their team. These expenses can range from listing the job position to new hire materials and supplies.
“If your client is hiring, there are out-of-pocket costs they have to pay. That might include if they’re posting the position online, … if they’re using a recruiter, … assessment tests, background checks, new hire materials, and supplies—all that stuff will be paid for by their business.”
– Caleb Newquist
The other side of cost per hire is employee time. This is everything the business spends during the preparation and onboarding of new hires via the amount of time an existing employee works to complete the onboarding process:
“Those [onboarding tasks] will not be done by a robot, at least not yet, so there is employee time to be considered in this cost per hire calculation. If that person is paid an hourly wage or salary, you need to prorate the salary on the [new-hire] activities that person is doing like reviewing applications, doing phone screenings, performing interviews, checking references, assisting with onboarding training, etc.”
– Caleb Newquist
Even though these costs may seem obvious to you, every business owner may not understand the actual expense of onboarding a new hire. As an accountant, your financial acumen comes into play during this process. You and your team have the talent to aid your clients by diving into their expenses to find potentially hidden costs of hiring and inefficiencies that can improve their cost per hire.
“There are a couple of things you can do for your clients when it comes to cost per hire. The first thing is making sure your clients recognize all the relevant costs associated with the hiring process. They just simply may not be capturing everything, and you can help surface all the true costs that go into hiring. … The second thing you can do is help identify inefficiencies in the process. Maybe there’s a technology solution your client isn’t using or something within the process that’s unnecessarily tedious.”
– Caleb Newquist
When you can aid clients in finding hidden costs and inefficiencies within their organization and offer corrective actions, you improve their hiring process and decrease the overall cost of bringing on a new hire. The resulting insights provide more than financial savings—they build trust between you and your clients.
Employee absenteeism, overtime rate, and turnover rate analysis
Three critical factors every business should understand are employee absenteeism, overtime rate, and turnover rate. Analyzing these three areas can show companies how well they care for their employees in comparison to national statistics, and where they can improve. As a people advisor and accountant, you are in the perfect position to calculate these statistics and assist your clients in making informed decisions about how to address potential problems within their companies.
Employee absenteeism
Many businesses struggle with at least one employee who does their best to avoid coming to work. Whether they are calling out sick or simply not showing up to their remote role, absent employees can cost companies a significant amount of money in revenue. To help your clients understand the severity of absenteeism’s effect on their business, you can offer absenteeism analysis.
“Most businesses know when their employees aren’t showing up to work, so that’s something they are aware of, but do they know how severe of a problem it is? Do they know how much it costs them … or how it compares to other businesses like theirs?”
– Caleb Newquist
A fantastic strategy for analyzing the amount of time your clients’ employees are missing work is to investigate the absentee rate over a time period. You can start by determining the scope of your investigation—monthly, quarterly, or annually. Then you can examine various inputs that factor into the analysis, such as worker days lost against workdays in that relevant period.
After analyzing the employee absentee rate for your client, you can compare whether that rate is comparable, below, or higher than the national average. If the rate is higher, you open the door to help your client analyze why they have more absenteeism at their company and assist them in making the proper decisions to decrease the number of lost workdays.
Overtime rate
As with absenteeism, overtime is something that could be hurting your clients’ businesses more than they realize. The reward of increased pay for overtime may be enticing, but having an overworked staff can increase costly errors and result in burnout. To help your clients understand how much overtime their employees are working, you can perform an overtime analysis.
“Overtime is a relatively straightforward thing to analyze. You could do it by job or by employee. Look at the hours worked and the rate per hour … to determine the average overtime rate amongst employees. … You want to look at it over the course of time. … Maybe it’s a month, [or] maybe it’s a quarter.”
– Caleb Newquist
Performing overtime analysis for clients provides invaluable data about how much each employee works, the amount of money spent via overtime pay, and whether they should consider hiring another employee. This service makes it possible for your clients to improve their company through a better work-life balance.
Employee turnover
Companies with higher employee turnover rates struggle with efficiency and productivity. Employee turnover often results from a dissatisfied workforce due to several factors. By providing employee turnover analysis for your clients, you can assist them in improving their work environment to provide an excellent place for their team to work.
“Next, we have employee turnover. … Start by looking at a time period: month, quarter, or year. Then look at all of the kinds of separations that happened during that period, voluntary or involuntary. [After that,] use the average number of employees to develop what that turnover rate is. Finally, you can compare and contrast that number to industry or national averages.”
– Caleb Newquist
This analysis process aids employers in discovering where their company excels and what needs to be improved to increase employee retention. As you review this data with your client, it opens possibilities to venture into different HR solutions to create a better work environment for their team.
Affordable Care Act compliance analysis
Another crucial area to assist your clients through analysis is the Affordable Care Act. Many business owners struggle to understand the best ways to navigate and provide healthcare options for their employees under this mandate. Your financial understanding, coupled with your knowledge of healthcare options as a people advisor, opens the door to provide exceptional assistance in this area. When creating advising packages surrounding the ACA, there are three items you should be sure to evaluate—safe harbor, full-time equivalent, and penalties.
According to safe harbor requirements, companies must offer affordable health insurance:
“The Affordable Care Act requires health insurance plans that are subject to the employer mandate to be affordable. … Under the ACA, it means employers can’t charge more than a certain percentage of the employee’s income [for health insurance]. It’s something determined by the IRS, and they announce it every year.”
– Caleb Newquist
In addition to knowing how much to charge for health insurance, your clients also need to understand their number of full-time employees:
“The second item under the ACA is full-time equivalent. The ACA’s employer mandate applies to employers with 50 or more full-time equivalent employees. For your clients hovering around that 50 employee mark, this is a significant number. … Anyone can go to the internet and find a full-time equivalent calculator, … but because of the nature of the ACA, it can be intimidating for your clients to keep track of that information when they’ve got a business to run.”
– Caleb Newquist
Finally, be sure to include calculations to keep your clients compliant with the ACA to avoid penalties. Fines under the ACA can reach staggering amounts for small to medium-sized businesses, and without the proper guidance, many business owners fall victim to these penalties. As a people advisor, you can give your clients peace of mind by providing the numbers your clients need to ensure they supply employees with the right amount of healthcare support required for compliance.
Learn more about providing HR analysis for your clients
Branching out into human resources advisory gives your firm a value-added service that offers peace of mind to your clients. When you provide comprehensive analysis services for your customers, you provide them with the information they need to run their business efficiently and create an excellent work environment for their employees.
If you are interested in learning more about how you can better serve your clients through human resources consulting, check out the entire webinar here. Also, be sure to read parts one, two, and four of this webinar article series for a more in-depth look at how you can better serve your clients through HR services.
Our mission at Gusto is to create a world where accountants focus on their clients’ people as much as their finances. Be sure to look into our People Advisory Program to learn how to train your team to help clients reach their potential. We also provide a partner blog full of resources for all your advising needs. Visit our Gusto for Accountants page for more information on utilizing people-based accounting within your firm.
