Best Practices in HR

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Julien Emery
  July 17, 2017

3 Important HR Decisions You Need to Make, Right Away

If you’re starting a new company, or your company has finally grown big enough to form an HR department, this article is for you. After setting up your office or celebrating the fact that you’ll no longer be handling day off requests yourself, the first thing you’ll need to do is figure out your vacation policy, insurance policy, and how you’ll approach employee compensation.

Vacation days

The U.S. is the only advanced economy on earth that doesn’t require employers to give employees any paid time off.

Still, you’d be hard-pressed to find many companies that don’t offer at least a few holidays off and some additional paid vacation days.

Most businesses offer at least six paid holidays:

  • New Year’s Day
  • Memorial Day
  • Fourth of July
  • Labor Day
  • Thanksgiving
  • Christmas

The Friday after Thanksgiving is often considered a holiday, too.

Whether you want to offer more paid holidays is up to you. A few other common days off are:

  • Martin Luther King Day
  • Presidents’ Day
  • Good Friday
  • Veterans Day

In terms of vacation time, the usual offerings typically look something like this:

  • 2 weeks off: after a few months or one year of service
  • 3 weeks off: after five years
  • 4 weeks off: after 10 or 15 years of service with one company

It can even go up from there. You can offer five weeks of vacation to someone who stays with the company for 20 years.

Again, there’s a lot of discretion here. If your competitors are only offering two weeks starting off and you can afford it, you may want to offer three weeks. If no one in your industry ever offers more than three weeks, you may stop there.

It’s also up to you whether you want to allow vacation time to roll over at the end of each year, or require that employees use it or lose it. Just keep in mind that if you enact more stringent policies, it may only hurt morale and eventually drive employees away.

Unlimited vacation

In recent years, some employers have also started experimenting with “unlimited vacationpolicies. This policy has the benefit of making it much easier for employees to request and receive time off. It’s also cheaper for employers because they don’t have to pay out unused vacation time at the end of the year, or when an employee departs the company.

The downside is that it’s just not for every business. Some companies need their employees in the office doing work as much as possible, so this just isn’t a feasible option.


Obamacare has largely succeeded in making healthcare more accessible, but it’s been difficult for many HR departments to fully understand how it works. Employers now have to offer health insurance to all of their full-time employees. Except when they don’t. It’s complicated.

Without going into too much detail about the intricacies of Obamacare, here’s why you should offer some sort of health insurance benefits, and what exactly those benefits should be:

First, if your company has more than 50 full-time employers, it’s going to have to pay a penalty if it doesn’t offer federally-mandated minimum health insurance coverage. This penalty increases the more full-time employees that you have.

If you’re a larger company, you can avoid these penalties by offering health insurance. But there are a ton of plans out there, and they vary widely from state to state. This means doing some research on what you can afford:

  • Look at how much the plan costs, the deductibles, and the co-pays.
  • Think about how much your company can afford to pay, and what your employees can afford on their salaries.

You don’t want to get a policy that has huge out of pocket costs if your employees can’t afford to pay them. While it would meet minimum legal requirements, it’s difficult to attract quality candidates without more generous health coverage.

And in the end, research the insurers you’re thinking about doing business with. Larger, well-known insurers are typically a safe bet. Regional insurers may offer better rates, but you will need to really check them out to make sure they’re offering a quality product. If you’re unsure, a knowledgeable advisor can help you choose the right carrier for your team.You can also find more advice by reading these blog posts:

How to choose a healthcare plan

How to save on health insurance


Finally, there’s the issue of setting employee compensation, which varies greatly between industries. Even geography can have a big impact on what employees make. A salesperson in a small town in Kentucky is likely to make less than one in New York City, everything else being equal.

Stever Robbins suggests first asking yourself how much value an employee is going to bring to your company. If a new hire has a proven track record of bringing in lots of business, and you think they can increase your profits by $500,000, it might be well worth paying them a $200,000 starting salary.

For support staff such as receptionists and IT personnel, Robbins says that figuring out their compensation is less about how much money they bring in, and more about how much time and money they save you from having to do things yourself.

For example, if you get a lot of phone calls and have a hectic schedule, it can be well worth paying a secretary $40 – 45,000 a year to ensure you have the time to work on really important aspects of the business.

But there’s still the market to consider, too. You might only value the work of a secretary at $40,000 annually, but if all of your competitors are paying their secretaries $50,000, you should expect to pony up the extra cash, too. Either that, or you’ll likely burn through a lot of secretaries as they head for greener, more lucrative pastures.

There are great resources online that can help you determine what the average salaries are for the different roles in your industry. We’ve also written a guide to determining employee compensation, keeping in mind critical factors such as:

  • You know the top of the scale, determine the bottom, too. Market rates will set candidates’ expectations here. Be familiar with what your competitors pay.
  • Look at other benefits you can offer besides a salary. Non-monetary perks (such as flex hours, opportunity for growth, a dog-friendly office) can also help attract and retain top talent, too.
  • Review salaries at least every six months to ensure you remain competitive.

Deciding on compensation and employee benefits are some of the biggest decisions you’ll make as an HR department. With a little bit of research and willingness to learn from your competitors, nearly any company can offer a competitive benefits package to attract and retain top-notch talent.

Looking for more resources on big HR decisions? Check out our guide to parental leave and the five outdated HR practices it’s time to retire.

Simplify HR processes, such as salary reviews, collecting employee information, and tracking benefits in Allay. Learn more.

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Source: Julien Emery