Tips to avoid costly HR mistakes
How to avoid HR blunders
Does it ever feel like you check an item off of your to-do list and then two more magically appear? As an HR professional for a small business, your work can feel never-ending. That’s why it’s important to embrace this piece for HR advice: Don’t ask ‘what’ you can do, ask what you ‘should’ do.
To help you focus on important tasks, we’ve put together a list of some of our favorite HR tips for managing each key area of your job.
5 HR tips to avoid HR violations
1) People data:
Automate data storage: Filing cabinets or spreadsheets might be better than nothing, but between lost documents and security risks, they can waste time. To keep your HR data truly secure and organized, use an HRIS solution.
Employee self-service: When you choose an HRIS, be sure it includes employee self-service. This allows your employees to access and update their own information without having to knock on your door.
Reports: An HRIS provides faster access to a lot of valuable data that can help your organization make informed, strategic decisions.
2) Recruiting top talent
Review your hiring process: With a shrinking job market, speed is the key to winning top talent for your company. Take a hard look at your hiring process and ask yourself if every step is truly necessary. To gain a good perspective on your hiring process, review it from a candidate perspective.
Utilize an ATS: There’s a lot of information juggled around during the recruiting process, from applications to interview notes. Keeping everything organized and on hand is necessary and can drastically speed up your process. An Applicant Tracking System can help you better manage your candidate information.
3) Effective onboarding
Get onboarding paperwork out of the way: To make the most of each new hire’s first day it’s important to have the paperwork completed before they start. They are eager to start their new job– introduce them to the team, outline their job expectations and set them up for success by using an onboarding software instead of piles of paperwork.
Incorporate company culture: When a new hire joins your team, you aren’t just asking them to do a job– you’re asking them to adopt and add to your culture. Be sure your training includes culture training as much as technical training.
4) Performance management
Frequent communication: Do away with the annual performance reviews in favor of less formal, more frequent conversations. Implementing frequent communication can benefit both employees and managers as you are altering the discussion focus to today, rather than the past.
Simplify the process: To keep employees and managers engaged in the process, make it as simple and accessible as possible. It should feel more like an opportunity to provide feedback rather than another time-consuming hoop to jump through.
5) Build an inspiring culture
Define values: A positive company culture starts with a solid foundation. Well-defined values should make up and inform every decision made within your organization. The values should be communicated, understood, embraced and demonstrated internally. Take the time to define your organization's core values.
These tips for HR should help you get started on the elements that are important to your organization’s success. While we realize managing HR in a small business is overwhelming, choose one focus, work on it until it’s finished, then choose your next priority.
The cost of HR mistakes
Recruiting and hiring employees, managing payroll, and employee management can be handled by a small business owner in a pinch, but there are many details that are easy to overlook when you’re trying to do HR things on top of running a business.
Failure to remain compliant in these areas can be very costly, but they hurt, even more, to know they could easily have been avoided in the first place. Sometimes it isn’t feasible to establish a true HR department, but it’s important to realize that a “do it yourself” HR philosophy only works if you have the foresight and resources to avoid common compliance mistakes before they happen.
1) A bad new hire
Hiring top talent is time-consuming work that requires a particular skill set– good people skills. According to Small Business Trends, the cost of a bad hire is steep. When you factor in recruiting, training, benefits and salary, a failed hire can cost you nearly $50,000.
Hiring has become more important in small businesses since most are still building the foundation for an effective recruitment process.
2) Incorrect employee classification
Once you’ve committed to your hiring decision, you need to adhere to specific guidelines for classifying employees as put forth by the IRS. Some small businesses tend to cut corners and get fined.
Misclassification by small employers is most commonly in one of two ways. Some will declare employees as vendors or independent contractors, even though they don’t meet the guidelines for worker independence. To determine whether you’re properly classifying an employee as a full-time employee or an independent contractor, you should consider the following:
- Does my company control when, what, where, and how the worker does their job?
- Are the means by which the worker completes the job provided by my company? Ex: Do you provide the equipment needed?
- Do you provide the worker with employee benefits?
If the answer to these questions is yes, then the employee cannot be classified as an independent contractor.
The second most common misclassification mistake employers make is classifying a salaried employee as exempt instead of non-exempt, preventing the company from having to pay overtime wages.
3) Not aware of government regulations
Proper classification of employees is a large part of being compliant with the Department of Labor regulations, but fill compliance entails so much more.
Be aware of the specific guidelines for your industry. Certain topics like securing protected health information apply regardless, while other topics depend on the product or service your company provides.
Lastly, provide your employees with the benefits that the federal government mandates based on company size and number of full-time employees. Nationally, social security taxes, unemployment insurance, and workers' compensation are required. Other items like medical leave and disability insurance vary from state to state. The Affordable Care Act outlines the health care coverage employees are required to provide.
4) Failure to create corporate guidelines and policies
Similar to how poor hiring can set your company back in many ways, failing to set policies for how employees should conduct themselves can hurt too.
Want to learn how to conduct an HR Audit to avoid these mistakes? Check out the latest HR Party of One episode "How to Conduct an HR Audit" below:
For smaller companies, it’s necessary to set clear guidelines and expectations for your workers and hold them to those standards. This means handling the training, performance evaluations, promotions and firings in the right way. Not having policies set in stone for these topics means risking unhappy employees and an uncertain future. Something as simple as creating an employee handbook can go a long way in effectively controlling behavior and preventing HR violations.
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