Tips to Help Businesses Avoid Making Costly Human Resource Errors
There are many things to juggle when it comes to managing a small business – finances, marketing, sales… and then there are your employees and managing the people side of your business is likely one of the major and most time-consuming areas you juggle as a business owner.
So, we’re going to discuss some of the most common HR mistakes that small business owners make and how you can avoid them in your own organization with present strategies.
Common HR Mistakes (and How You Can Avoid Them)
Misclassifying Employees Do you know the difference between a contract worker, exempt, and nonexempt employee? If not, you need to familiarize yourself with these classifications as the U.S Department of Labor and the Internal Revenue Service both have strict guidelines. The duties and pay of employees classify whether or not they are permanent employees, so re-examine your independent contractors and exempt employees. Do not try to classify employees as independent contractors to save on benefits either! If you’re still not sure about these classifications, ask someone who can help you.
Not Hiring Right Not hiring the right person for the job can be a major disruption and cost to your company. The solution? Develop a recruiting strategy for your organization! Having a recruiting strategy will improve your hiring success as it will allow you to know and define what a successful candidate looks like, see beyond the resume to traits and behaviors that indicate success, screen and select candidates in a legal and effective manner, and close the deal through selling your company and the benefits of working there.
Unclear Job Descriptions Job descriptions are important as they help you screen and select candidates during the hiring process, but also serve as a guide to communicate clear expectations and measure performance once hired – moving forward, almost everything related to employment practices look back at the job description. Job descriptions don’t have to be overly complicated and you can often find great templates and samples to build off of online.
Lack of Employee Handbook Employee handbooks are absolutely essential – not only do they outline the employee’s rights, they also codify against the employer’s expectations on everything from dress code to time off allotments. They also give businesses legal justification for termination, limited protection from discrimination lawsuits, and blanket criteria on which to evaluate employee performance. The best part? Employee handbooks aren’t hard to create! A simple Word document will suffice so long as they are written in compliance with federal, state, and local laws to avoid legal complications.
Performance Issues Not addressing performance issues can affect many areas of your business so if you have an employee(s) with performance issues, do not ignore them or hope that they go away on their own. Create a performance review with a correction plan for the employee so that they know how to improve, address employee issues promptly, and be consistent with all employees. It is also essential to ensure that you have correct employee documentation – calendar documentation of discussions and counseling, written warnings, and incident logs are a few examples.
Not Paying Correctly The two areas to pay attention to here include overtime and exempt versus nonexempt. Exempt employees are exempt from working overtime so be careful classifying them incorrectly or you might find yourself owing overtime to someone after months of incorrectly paying them. Overtime laws can also be very confusing so it is essential that you, as the business owner, as well as your payroll administers understand the federal and state overtime rules and apply these to all of your employees.
Not Knowing or Understanding the Law Know the employment laws and which ones you should abide by. There are many human resource management laws that small business owners ignore, but doing so could be detrimental to your company. Some of the most common areas you should be concerned with in terms of employment law include: - Documenting I-9 workers properly - Pregnancy discrimination - Family leave - Military leave - Age & gender discrimination - Safety - Disability For more information on human resource management laws and which ones your small business should be abiding by, visit the U.S. Department of Labor website.
Harassment / Discrimination Complaints Most small businesses can’t afford the cost of any legal claim, let alone an employment practices liability claim which is one of the most costly disputes around. Luckily, there are ways to stay on the right side of the law by creating and maintaining a work environment that is free of discrimination and harassment. A few ways you can do this are to create written procedures that your organization follows consistently, train your managers, and provide a complaint process that allows you to intervene immediately and address all complaints.
Trouble Retaining Employees Employee retention is a big issue in the workforce, and it’s not just about keeping your employees happy – it’s about retaining your talent and ensuring you keep the best people with you for as long as possible. ⅓ of new employees quit after 6 months and it costs an employer an average of 33% of an employee’s yearly salary for their exit. Training and development opportunities for new hires, better communication between management and staff members, clear job descriptions that define responsibilities, adequate staffing levels, and recognition by managers when work is done well can all lead to improved employee retention and happiness.
Lack of Focus on Employee Health and Wellbeing Employee stress levels are at an all-time high, and standard benefits packages can’t solve all the problems of stress and unhappiness. Companies today need to offer better and more varied benefits, including mental health services and benefits focused on childcare and eldercare. Human resources can also support employee health and wellness in their daily work lives by offering flexibility around hours, more paid time off, or better schedule management to prevent employees from feeling overwhelmed.
Do you need additional assistance juggling the people side of your business and avoiding common HR mistakes? Remember that Premier HR Solutions is here to help your small business! Schedule a time with Scholley Bubenik at the link below to learn more about our expertise and services.