CEO - Questco │ ForbesBooks Author - Beyond the Superhero: Executive Leadership for the Rest of Us │ Passionate advocate for small/midsized businesses.Follow Follow
Welcome back to The RecruitingDaily Podcast! Jason Randall, CEO of Questco, joins William Tincup to discuss the cultural implications of requiring employment agreements. Questco founded itself on payroll and HR services, so Jason is the perfect guest to tackle this topic.
Tune in and make sure to leave us your thoughts in the comments.
Listening Time: 23 minutes
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Ladies and gentlemen, this is William Tincup, and you are listening to the RecruitingDaily podcast. Today, we have Jason on from Questco. We’re going to be talking about cultural implications of requiring employee agreements. So this is going to be really, really fun. I can’t wait to get into it.
Jason, would you do us a favor and introduce both yourself and Questco?
Well, thanks William. Happy to be here today with you. As you mentioned, I am CEO of Questco, which is a player in the outsourced HR space nationally. We are a professional employer organization that has as our clients, around a thousand of them that serve well over 20,000 work side employees, and the decision to employ Questco as a client is to decide to offload a lot of the HR burden that really send a business sideways, I guess, and instead offload that to us.
The client employer maintains the privileges of everyday management and we help them through all the tax stuff, all the administrative details and provide some wonderful large company benefits as well, in terms of medical and access to our large group programs.
So, one of the things I love about the PO model in general is that you use buyer power. The more employees that you have, the better, the deals, the better insurance that you can get. If you only have a hundred employees, you go to, well say Aetna or United Health, it’s harder to get a Cadillac. I mean, it’s not harder, it’s just more expensive to get a Cadillac plan.
But if you, if you’re working with a great PO, then can get access to those things. So I love that and I love again, keeping companies compliant, I guess is a great thinking of it, is just making sure that, some of it is they don’t know the rules, the HR rules in their state, or even federally, and ya’ll know them backwards and forward. So, absolutely love the model.
What have you seen in employee agreements recently? Like over the last two years, what have you seen kind of from the folks, your customers, and the folks that you deal with?
I would say it’s a pretty evergreen area where clients will ask about the relative wisdom of offering them. And of course, that depends by state, and we’re not here to talk to today about the legal perspective, that, which is a very different conversation. It’s a good idea regardless of what the law requires.
We would always… We ask that our clients do what the law requires, of course, but then there’s another dimension of this, which is what’s the wise decision to do in your environment? And that’s a question that’s pretty evergreen in our case.
I love that and it’s and company by company, right?
So you follow what’s in the law, the spirit of the law, what’s in the law, but then you’ve got to do what’s best for the employees and what’s, what’s best for the company as well and some of it’s just guide rails, like making sure that people understand, but those are policies. Some of those policies can be handled within the employee handbook, if you will.
So when you, when we talk, start talking about cultural implications, what are you seeing in terms of candidates or even new employees and what their expectation is, in terms of signing, or thinking about an employee agreement?
Well, so if you step back and look at what’s trying to be accomplished here, rare would be the candidate, or the employer, that just loves an environment where somebody says, “I want to be work for a place where I have no idea what’s expected of me.” Right? That is a recipe for a lot of bad things to happen.
So at its core, you’re talking about this issue is tell me what’s expected and then what’s the best way to communicate that and enforce that and live into that. And many, many times, I would say most times, that’s best accomplished through a robust handbook and of course that entire concept can be a butt of many jokes, William. Right?
The handbook, in contrast, what we would say is, well, if this is not a relevant item for you, well, it sure should be. You might be thinking about it wrong because the handbook really is the playbook, the rules of the road, to help guide these expectations. And that should be sufficient.
Again, I need to leave aside specialty areas like education or specialized situations like employees subject to a collective bargaining agreement but if we’re just talking writ large around the population. Generally speaking, it may not be in the best interest of that employer to offer a bespoke employment agreement, unless a couple of things are at play that I’m sure will get to.
But as a whole, what’s important is to make sure you have thought through, as an employer, how do I communicate to our employees what to expected for them to must do, should do, and then must not do and where is it articulated? The handbook should be the first resort for that but there are some situations where an employment agreement may well be the wise choice.
So let’s, again we’re not dealing with federal and state law and we’re not dealing with legal things, but just the things, because you’ve interacted with thousands of clients over the years, where do you make the liner? Where do you give the advice of, this should end up in the handbook or this should end up in the agreement.
How do you guide generally? How do you guide folks through that process?
So you start with the principles. What I would recommend is that let’s live into values of being transparent, being consistent and perhaps most importantly, in this environment, being fair. The perception of fairness across this. And then most times that is accomplished with more of a handbook approach. In other words, take it down a notch in formality because an employment agreement can be restrictive on both sides and particularly in a small business that has a more dynamic environment. In other words, things are changing rather quickly, both sides, either side, might feel really hemmed in, by something that might be obsolete almost as soon as it’s signed, in terms of some of the… Depending on exactly what’s in it and what’s specified. You wouldn’t want an employment agreement, first and foremost, to be a barrier to success of company or teammate. So, that’s where the primary hurdle’s to accomplish.
Is this something that is unique to the individual role, either because you’re hiring a very senior manager and some different rules need to apply, or because you have a specialized kind of role that might, for example, be much more deep into company secret sauce type items, to where you might feel the need for a higher level of protection.
In other words, do you have a situation that requires something exceptional? That’s how I would encourage people to think about an employment agreement in the current climate is, is there something exceptional because otherwise you could probably accomplish this in a different way that causes you less heartburn down the road.
Yeah and on both sides. Right? So it creates less anxiety for the newly minted employee, because they’re going to be looking at both those things. There’s a employee handbook that’s going to explain all of the expectations and policies and rules and all kinds of good stuff. And the employee agreement, at least historically it’s a bit more rigid.
With legalese that most people can’t read and don’t understand. But you know, as it relates, at least historically with employment agreements, three things that usually were always kind of covered was noncompete, nondisclosure, non solicitation. Sometimes those are treated in the employee handbook and talked kind of openly about, you know, what, you know, the philosophy and kind of how people feel, et cetera. But some of it’s kind of, as you said, it’s kind of called out because they want special protection on both sides, for both parties, to make sure everyone knows where the lines are.
Yeah, that’s right. I think something that is more appropriate for an employment agreement, in addition to sort of the specialness of certain roles.
And non-compete, non-solicitation, is a great example, William, because you have probably very different expectations for say a line employee in a retail environment as employers, like some of the big, fast food chains have learned in terms of overreach on some of these items, versus corporate staff that might be actually holding company secrets.
It might be much… You want those things to be far less portable than say a line employee. That uniqueness factors in and that’s suggestive of the employment agreement.
That’s what I love about that and the way you’ve way you’ve modeled that is, all of this language that goes into the handbook, there’s going to be a handbook kind of for everybody. Got it.
But what goes into the agreements going to be kind personal. Should be personalized to the individual. Sections just, you don’t need them. And again, I think you, you use the word overreach. I think that’s a great way of thinking about it. It’s like they don’t need to read that. You don’t need it in there. The anxiety just doesn’t need to be there on either side.
But again, if you’re working in the patent part of a technology business, yeah, fair enough. You might want to have some special protection there. I mean, I think employees that would go into that job would expect that.
Yeah. That’s I think that’s just a dominant principle, as if you’re doing these all the time and they really don’t change employee to employee, then you got to ask yourself why you’re doing it.
Right. That’s a good point.
I think I could share another category that, I guess I’ll share a story. This is also one that I share in a book I just released. So in addition to my CEO responsibilities at Questco, I’m also, as of a couple months ago, a published author through Forbes books with a work called, Beyond the Superhero: Executive Leadership For The Rest Of Us.
The central theme of that work touches on some of the things we’re doing here, which is when you’re new to senior leadership, a lot of things might come at you that are different then what’s expected.
When I was new to my CEO role, something that happened to me here at Questco is a number of legacy employees would come up to me and talk about all the things that they were promised, whether it’s a raise, a new role, some sort… Something was promised to them, and it’s not in writing anywhere, let alone budgeted. So this is a real opportune thing to put into… Document it somehow, right? And an employment agreement is very right for doing this.
Again, it’s bespoke to the individual, customized to the individual, but if you’re promising something in the future and you’re not documenting in something that’s agreed on, on both sides, in other words, an employment agreement, you set the stage for someone like me to come in, see nothing, and then there’s going to be some upset and some friction from that situation. So this is just again, where you’re looking into the future, whether it’s a post-employment obligation or something within the employment environment and it’s unique to an visual, that’s a great use of an employment agreement to capture some of those items.
Well, what you’ve empowered there is both from the management and the candidate. Excuse me, the employee perspective is, hey, let’s write a quick addendum. Like, let’s just, let’s amend the employment agreement. Let’s just make sure it’s Exhibit A, Exhibit B or whatever, and now it’s in there. Then both the legal team, anybody that handles that side of the business, but also good fences make for good neighbors.
Again, I love the way that if you do that and you’ve empowered the employee to say, “Okay, you’ve just promised me this. I have that expectation. Why don’t we amend my employment agreement and let’s just make sure that it’s in there, so in case anything happens to either of us.”
Yep. Comes back to transparency, consistency and fairness. You’re doing that. When you’re accomplishing that, then these agreements become a productive tool for the organization, as opposed to perhaps, we got one more administrative burden.
Yeah, or just, or seen as punitive. Purely as a punitive document.
What have you seen with remote employee with folk again, the things that we’re dealing with over the last 18 months plus, how has that impacted employee agreements?
Well, I would say it affects the fundamental employment construct in some unique ways, right, William? We didn’t have to tell employees to wear a full compliment of clothing to the workplace before Zoom became a thing. Things like that, suddenly things that we never contemplated, became routine and oftentimes our documentation around these things didn’t keep up. We didn’t have to think about things like, well, what if there are young children present in the virtual work environment?
When you didn’t have a virtual work environment before, you were likely silent to this issue. So the overall point here would be, as your circumstances change, your documentation needs to evolve as well. So what we would see is, well companies are confronted with new situations, what an opportune time to take a look at what’s out there and do we need to communicate eight different things, to be consistent, and to be transparent and fair to our workforce?
That’s again, that is less about employment agreements and more about setting clear expectations and then the employment agreement might be one way, and a rare way, to accomplish that. A handbook updating is probably a little more appropriate for things like what we’re we’re discussing.
Right. Right. So when we think about cultural implications, one of the things that I wanted to get your take on is what is the tethering to corporate values, company values and leadership, and how they view these things.
So, if I understand your correction… Your question correctly, it would be, how does an employment agreement relate to company values? Or do I misunderstand you?
No, no. That it’s spot on.
Well, bottom line is if you’re… An employment agreement is an execution of ultimately a strategy and thus a vision. If it’s in conflict with some of these principles, then again, it needs a closer look. You’re doing it wrong. Some other driver is taken charge and probably shouldn’t. In other words, make sure that whatever you’re implementing, is consistent with the culture you’re trying to create.
So for example, if you pride yourself on a loose collegial culture and you’re subjecting every employee to an employment agreement, that’s 75 pages long, well, it might be undermining what you’re trying to accomplish there.
But I want to come back to your point about good fences and good neighbors, because even in the most casual and family-like of corporate cultures, it’s still important to understand what the ground rules are and what’s appropriate and what’s acceptable and what’s not. Because again, you can’t be there to guide every situation, every time, and values should underpin that. That if it’s a supportive culture, make sure the documentation will support what you’re trying to do in that regard, as opposed to work against you.
So, at one point you’ve dealt with folks that are reluctant, either lawyers or business owners from the C-suite that might not see this, that might not understand the distinction between what goes into the handbook, why that’s important versus what goes into the employee agreement and why that’s important.
So you’ve… I really want to kind of get at and pick around the, how do you deal with reluctant folks? How do you deal? How do you coach them up and kind of bring them to a place where they understand, again, like the great example that you just said, you have a loose collegial culture, very important. You’ve been been creating and fostering this culture for 10, 15 years, 75 page employee handbook. Conflict. How do you…
Those are tough conversations clearly, but how do you have those conversations with some of your clients or people that you know, that are going through this?
I think a general rule, first of all, is to keep things short and in plain English and easy to understand and that will by itself, reduce a lot of reluctance because people just flat out understand better what the scope of it is that what you’re asking. Whereas if it’s complicated or lengthy, or there’s a lot of clauses and provisions, they might be more likely to want to seek outside counsel. Not that that’s a terrible thing, but it is something that doesn’t strike me as a real healthy workplace situation to have that to be a routine part of your environment.
So keeping it simple and then addressing concerns just authentically and transparently. Once again, explain the motivation. Here’s why this is in here. Here’s why it’s important. Here’s why you should care about it.
If it’s about understanding and a meeting of the minds, there are other issues that are a little more thorny. For example, around perhaps the length or scope, of say a non-compete or non-solicitation agreement. That’s an issue that needs perhaps some legal counsel to advise on what the boundaries are legally, as well as think about what you’re trying to accomplish.
Again, there is sort of a tendency to make these agreements one-sided when they come back from internal council or a firm you’re retaining. I believe it’s important to meet a little more in the middle, a lot of the time, hear the objections and compromise where it doesn’t really cost you anything from a business consequence, point of view. The nice to have’s from a legal perspective, are often not nice to have from a cultural perspective.
I love that and I love the way that you broke that into plain English and explaining things to folks, because oftentimes it’s a, as you well know, it’s a PDF or a DocuSign that’s over, and it’s in legal language, which not all of us speak legal. And so there’s an intimidation factor for a lot of folks that especially for the first time they’ve signed an employment agreement, that they don’t even know what they’re signing. They don’t even know what these things might even mean, but it’s scary. It’s intimidating.
I love the way that you kind of broke that down. You know what? Just explain it, like go through the things like here’s what we’re trying to achieve with this section. So yeah, here are the words. Here’s legalese, important. However, here’s what we’re actually trying to convey in this part of the employee agreement and that also is true in handbook too. I mean that same philosophy can apply. It’s like here’s why we have this harassment policy. So, here’s what it is. Here’s a policy. Signature required. However, here’s what we’re really trying to do with this policy.
Yeah. You’re just spot on, William, because you are hitting on the opportunity we have to make that kind of conversation, supportive of the culture we’re trying to build, as opposed to there’s another bureaucratic angle of this as well. I, as the company, this is something that HR makes me sign or legal makes me sign and so there’s no ownership on either side. It just becomes an empty paper pushing exercise. That’s a huge missed opportunity to really underscore the values that can make us successful.
You know, what’s great is in the way that you’re thinking about it is during the onboarding process is you celebrate. You find a way to actually turn something that is historically been a negative, into a positive. And again, if you’re explaining it and you’re really fundamentally giving people insight into why this section is important and why we wrote it the way we wrote it, and what it means, and if you have any questions again, you can talk to a personal lawyer, you can do whatever you need to do. You can look things up on the internet but here’s what we were trying to achieve. That can actually be a really wonderful part of the onboarding experience.
I love the way you think, because yeah why shouldn’t this be a celebration? Somebody accepting a job is inherently an optimistic proposition. We’re banking on a future together. That’s hopeful. That’s happy. So let’s not suck the energy out of the room with conversation that detaches from that humanity, but rather use it to support the humanity and if the paper matches the intent, you’re going to be a home run hitter when it comes to getting people to onboard in a culturally appropriate way.
So last question, before we roll out and this is just, I want your advice on folks that are going down this road. Maybe they’re starting companies and then that’s the world I live in with is a lot of startups. What should they start with?
Again, there’s nothing there. That’s not an established company. There’s not established culture. What do you believe is kind of the way that they should approach employment agreements and the employee handbook?
I would start with nowhere near putting pen to paper and instead think about the culture you want to create and then a firm understanding of what’s legally advisable as well. Because again, we sort of set that aside, but there are some important things that, in other words, the attorney’s perspective is valuable here. It’s just not all consuming.
So you take that feedback and then I think he final thing I would say, though it might sound a little bit self-serving is, this is a great area to seek help in, unless you’re very deep in HR practice and perhaps even if you are, you have a lot of things on your plate to think about when you’re building an enterprise when it’s new. What a wonderful time to ask for help and expertise, to guide you through the cultural and legal ramifications of those early decisions you’re going to make that can set you out to get farther faster, in your professional success.
I love it. Brother, thank you so much. This has been a wonderful topic and I love the way that we’ve kind of parched it and given people advice. So, Jason, thank you so much for coming on the RecruitingDaily podcast. I’ve absolutely enjoyed this.
Likewise, William. Thank you so much.
All righty. And to everyone, thank you for listening to the RecruitingDaily Podcast. Until next time.
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William is the President & Editor-at-Large of RecruitingDaily. At the intersection of HR and technology, he’s a writer, speaker, advisor, consultant, investor, storyteller & teacher. He's been writing about HR and Recruiting related issues for longer than he cares to disclose. William serves on the Board of Advisors / Board of Directors for 20+ HR technology startups. William is a graduate of the University of Alabama at Birmingham with a BA in Art History. He also earned an MA in American Indian Studies from the University of Arizona and an MBA from Case Western Reserve University.