Whether your brewery is a start-up, or well-established and growing, how you handle human resources is a key aspect of business success. Your workforce supports your brand. Craft breweries are popping up all over Florida, and enjoying great success. Each brewpub and product has its own unique value proposition and niche to squeeze into the crowded field of existing brewery options.
Of course, great product, unique recipes and a prime location are key elements to success, but don’t overlook another key element of your brewery’s success – a vibrant human resources function. Not only will your brewing business need to create properly compliant HR processes and administration (the boring but important HR stuff), but HR can help drive small business results by recruiting great talent, building policies that define company culture, and ensuring your business delivers the competitive pay, benefits and perks expected in today’s workforce. HR counsels with ownership to recommend methods and practices to develop employee effectiveness and respond to changing market conditions. Florida brewing companies have several options for handling HR.
First, a brewing can outsource everything to an HR outsourcing company, also called professional employer organizations (PEOs). The PEO becomes a co-employer of your employees and handles the basic HR administration, including payroll, new hire processing, employment taxes, workers’ compensation and the offering of employee benefits. There are many PEO options out there, from large national companies to local businesses. These companies do a good job with the “nuts and bolts” of HR compliance, but they can be pricy and deliver unwieldly packages of bundled services. For well-funded small and start-up breweries, this may be a very good option so that ownership is freed up to focus on business operations. PEO services range in price. PEO clients are either charged monthly administrative fees per employee/per month or charged a monthly percent of payroll fee. As an example, let’s say a small 10 employee brewery is paying monthly PEO fees of $800 to $1200 per month (not including initial start-up fee, employee benefits and workers’ compensation costs). The monthly cost is fixed, regardless of fluctuation in HR activities, and will experience controlled increases as the company grows.
Another option is the “do it yourself” method. Using this option, your brewery generates and develops its HR processes in house. The DIY approach is preferred by breweries that seek to retain maximum control of internal operations (such as hiring, firing, handling HR paperwork, complying with federal and state employment regulations, managing unemployment, injury and workers’ compensation procedures, etc.). You also avoid the high costs of “all inclusive” PEO services. While it is feasible for management to utilize business software such as Quickbooks to handle payroll, perhaps with assistance and oversight from a bookkeeper or financial manager, many companies opt for a slightly modified version of DIY, under which only the payroll function is outsourced. There are many resources, including online cloud-based systems, to handle just payroll, payroll taxes and employee deductions. For a 10 employee brewery, you might find payroll services for around $200 per month (depending on payroll cycle), with some additional fees for W2s and quarterly employment tax filings.
A third option is a hybrid between a fully outsourced model and the DIY approach. Some PEOs modify their “all inclusive” PEO contracts to offer individual services under an Administrative Services Organization (ASO). The ASO provides a cafeteria-style selection of individual services for human resources, payroll and benefits administration. Your brewery decides what specific HR tasks to outsource and retains full responsibility for the remaining functions. For instance, your brewery might select to outsource payroll, benefits administration, and unemployment claims. Using the ASO model, the HR service provider is not a co-employer of your brewery staff, so the brewery must retain its own payroll account, workers’ compensation policy (and experience MOD), SUTA rate and employment risks for hiring and firing.
The last option features the highest level of customization and flexibility (and is trending with the growth of the freelance community). DIY focused breweries can purchase fractional HR services to conform to their evolving, periodic, or fluctuating HR needs. For instance, a start-up or growing DIY brewery may have the basics covered (payroll, admin support, insurance advisors) – but needs help recruiting, or would like to design a company handbook or an on-boarding process to build engagement and strengthen company culture. An external HR consultant can also step in to handle unplanned HR events with minimal disruption to operations … employee complaint, investigation, discipline meeting, employee injury, terminations, etc. The level of trust and familiarity can grow by using the same consultant over time, but the beauty is that you only pay for services when you need and use them. HR consultants range in price and expertise depending on location and services.
As your brewery builds followers and increases sales, consider (or reconsider) the best option for your HR administration. Successful businesses and breweries take HR beyond the basics. Old school HR dutifully handles common administrative tasks, follows direction, and maintains the required paperwork and personnel files. This can be handled by a PEO, ASO or using DIY principles. However, a craft brewery in 2018 should update its HR mindset. Strategic HR tools and techniques can strengthen the connection with employees to build your brand. HR can serve as your “workforce guru,” or Sherpa who delivers creative thinking, changing tactics and strategic recommendations to find and retain amazing talent.
Consultstu advises Florida craft brewers on HR matters and delivers fractional HR expertise for start-up businesses. Our next blog post will present ten critically important HR issues that Florida brewing companies are facing in 2019.