5 HR Blunders That Could Cost You A Fortune!

08 Nov 5 HR Blunders That Could Cost You A Fortune!

As you’ve probably heard before, being a truly great business owner requires you to master the art of juggling. When you’re the head of a small business, you need to be able to fulfill multiple roles, at least until you’ve grown enough to hire people to do the work for you. From your accounting to your marketing to your legal needs, you’re going to have a direct and significant role in every single facet of your operation. With all these different things to worry about, it can often be difficult to leave enough time for dealing with HR. Your employees are the lifeblood of your business, and brushing over them can lead to some seriously expensive mistakes. Here are a few of the biggest ones you need to avoid.

Rushing Through the Hiring Process

When you’re in the early stages of running a business, every second counts, and with all that pressure you may be tempted to get your recruitment drives over and done with as quickly as possible. However, if you rush through it all, you’ll be creating a lot of opportunities for mistakes. If you don’t spend enough time planning and drafting job advertisements, you’ll end up attracting candidates who aren’t quite what your business needs. Furthermore, if you rush your way through the interview process, you’ll simply end up with warm bodies who will do their jobs, but won’t do anything to really take your business places. Ask any HR consultant, and they’ll tell you that a single bad hire can end up costing a business tens of thousands in wasted resources, so rushing the hiring process is one big mistake you seriously can’t afford to make. If you think you’re getting through recruitment drives a little too fast, then you need to take steps to make it more meticulous and consistent. Start off with a clear and accurate job description that will attract the best talent, and scare off people who are only after a paycheque. When it comes to your interview process, make sure you’re examining every last trait of the candidate to make sure you get the right person for the job. One thing that a lot of business owners unfortunately overlook is how the candidate is going to fit in the company culture. This is just as important as them bringing the right skills to the job, especially within a small, tight-knit workforce.

Misclassifying Employees

This error is a little more technical, but certainly shouldn’t be overlooked. If you fail to classify your employees properly, it could drive your business into the ground before it’s properly started! The IRS is notorious for picking up small businesses for misclassifying employees as contractors. Their penalties, as I’m sure you’re aware, can be very expensive, so you need to familiarize yourself with the differences between different classifications. By and large, it’s safe to assume that a worker is an employee, unless you don’t have the right to control how they do their job, you don’t control their rate of pay or contribute taxes out of it, or you don’t have a written contract stating they’re a full employee, with leave, benefits and so on. Obviously, you may not be that well-versed with employee law and technical areas like this. To make sure you’re handling it all the right way, it may be worth hiring in a consultancy service like Ellis Whittam to get you through the first year.

Outdated or Missing Employee Handbook

Although you’ll obviously try your best to hire hard-working people with good morals, there are going to be people who don’t fit the profile, and don’t think much of breaking company policies. Obviously, when this happens, you’re going to want to reprimand or even fire the employee in question. However, this is going to be a little hard if you don’t have your policies written out in an employee handbook. If you’re setting out rules which you want to be able to implement where it counts, having everything in writing is of the utmost importance. Fail to do this, and you’ll just be asking for trouble. Unfortunately, writing out all your company policies in an employee handbook isn’t a simple, one-off job. After creating a first draft, you need to come back to it regularly, refine any outdated policies, and make sure that you’re communicating these changes to everyone in the organization. Furthermore, all employees should be made to sign a statement of acknowledgment, saying that they’ve read and understood all the rules and expectations in the handbook. Without an employee handbook which you can rely on, holding employees accountable for their actions can become unnecessarily complex and difficult.

Forgetting About Training

As you’ll be well aware by now, nothing in business is static. No matter what industry you look at, there’s always new methods and practices being formulated to improve efficiency, not to mention new tech that’s always in the works. Because business is in a constant state of change, you need to make sure your employees are moving with it if you want your company to really fulfill its potential. When you invest in your employees, they’ll pump returns back into the company. To make sure you’re really harnessing this, training should always be at the front of your mind. Every new recruit should start with a great onboarding process, and have access to a range of professional development programs and events in their future. When you’re doing everything possible to help your new recruits hit the ground running, and providing a lot of opportunity for growth to your more experienced employees, you’ll be able to rest assured that everyone’s working at peak performance. Provided that you’re taking your time with recruitment and bringing in the very best talent you have available, you’ll begin to see significant improvements in every last area of the business.

Failing to Document Performance Issues

Of course, even if they’re provided with every single tool and resource they need to succeed, not everyone is going to be performing quite as they should. It’s essential that you’re not only monitoring employee performance, but recording it in detailed, permanent files. This is important for a couple of reasons. The first, and most obvious one, is that it will show you the root of various issues as they come up. Secondly, when you decide to fire underperforming employees, you’ll have something solid to fall back on. When a termination is done messily, it can run your business into all kinds of legal tangles. No firing is ever easy, but you can make yours that much simpler by properly preparing for it. When you notice a performance issue springing up, call the employee in and talk to them about it. This will give them the opportunity for self-assessment and a decent chance to rectify the issue. However, you should still make a point to document the meeting, and the plan for improvement you agreed on. If the feedback doesn’t make a difference, and you have to terminate the worker in question, the evidence will all be there should you need it. It may be time-consuming, but keeping these records can save you a lot of hassle in the future.

As you work on developing your business and making it grow, make sure you’re avoiding these costly HR mistakes. Managing your employees can be extremely tough, especially when you’re running a business for the first time. However, if you put your HR management off for too long, you’ll only wind up driving yourself into a disaster.

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