NEWS AND RESOURCES

General Business News for December 2007

Administrative Staff – A Necessary Evil?
Since the beginning of time, there has been a constant struggle – production & sales versus administrative & accounting. Over the years, the perception has been that production makes the product and sales finds buyers, making these two departments the ‘movers and shakers’ of a business, while administration and accounting, which don’t bring in the cash, are little more than drains on an enterprise’s resources. The truth, though, is that these “unproductive” areas of a business are as important as any other area – and the more closely all departments can work together, the more money you will make!

Let’s take a look at a few “less productive” departments in a typical organization:

Human Resources (HR)

Working in human resources is a thankless task. Depending on the size of your company, there are multiple laws that someone in your organization must analyze for applicability, then implement as is necessary. It is HR’s job to make sure you comply with federal and state labor laws, insurance regulations, and ERISA and OSHA requirements. All of this - on top of helping make employees productive by proposing incentives for workers, scheduling evaluations, and ensuring that disciplinary actions are properly handled - makes for one difficult task.

Many managers look at HR and cringe at the “unnecessary” paperwork it requires, but without HR, life would be very hard indeed. Filling out that employment application they require is a pain, but it’s probably crafted to help managers avoid making mistakes that can lead to some expensive employment- related lawsuits. How about that I-9 Form people have to fill out? Can you really tell if someone is an illegal alien from paperwork or possibly false ID cards?

A perennial favorite complaint from employees is the waste of their time when HR makes them fill out new insurance forms. Do line workers actually believe that HR enjoys reading all those forms? Well, HR certainly ‘gets the grief’ when a new insurance plan is chosen or an employee is having trouble with the insurance company.

Consider this, though: without HR, managers would eventually wind up asking an interviewee the wrong question and stepping into an Americans with Disabilities Act lawsuit. Like it or not, federal and state governments have laws that require an employer to obtain certain information on employees. Fail to meet federal requirements and you expose yourself and your company to heavy fines. HR is probably the one group that really cares about making sure employees are fairly treated and knows their rights under the various employee benefit plans. Without their hard work, it could be almost impossible to administer benefit plans for employees. Without good benefits, employees are hard to get. Without good employees, output falls and the company fails.

Maybe HR doesn’t bring in cash, but it does produce results - a happy, or at least happier, workforce - which translates into greater productivity. The greater the company’s productivity, the higher its profits will be.

Accounting

Accounting - for our purposes - includes the bookkeepers, accounts payable and receivable clerks, payroll clerks, controller and other personnel who make sure cash is collected, bills are paid and everything is accounted for. Some folks consider these people to be giant cost centers, but consider the following:
  1. If the folks in accounting don’t get bills sent to customers in a timely manner, collections will be slow. Slowed down collections mean cash flow problems. Cash flow difficulties make it hard for the company to pay bills, so a firm must either borrow to meet obligations or go without essential supplies. Neither option is good for a business’ health.

  2. Regardless of how automated your facility is, someone must still turn on the machinery. Failure to do so kills production. What happens if payroll fails to pay employees on a timely basis? A good workforce will be hard to maintain if the company fails to reliably pay them.

  3. Accounts payable and payroll have to work together to make sure payroll taxes are paid. Federal and state governments take a dim view of employers who withhold money from employee paychecks and don’t remit it to the proper authorities according to law. The penalties for failure to pay taxes accrue quickly and government is not afraid to take the money directly from your bank account, even if it puts your company out of business.

Examples could go on forever, but the fact is that without a smoothly functioning accounting department, a company cannot operate efficiently. Lack of financial information will eventually sink a business - like Christopher Columbus trying to cross the Atlantic with no charts and no navigation instruments. A business’ accounting function enables it to minimize costs, increase profits and keep vendors and lenders happy. It may not bring in cash, but it does help you keep it!

Conclusion

After careful consideration, can we agree that the administrative functions of the business are as important as the sales and production functions? If so, what will you do to insure that those areas are staffed with happy people who will give 100% to keep your company running smoothly? Give us a call and let’s talk about ways to make your administrative staff’s life easier, and maybe make your life easier too.

Happy holidays!

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