As a business owner, you wear many hats. If you have a small business, it’s likely that one of those hats is HR manager. In addition to managing all of the other aspects of your company, you also need to take care of everything that comes along with having employees, from hiring and firing to payroll to developing policies.
Chances are, though, that your experience and knowledge in HR is limited, and you’re learning how to juggle all of the aspects of HR as you go. Unfortunately, this approach often leads to mistakes – costly mistakes. While the best way to ensure HR is being handled correctly is to outsource to a company offering PEO services, when you know the most common mistakes and how to avoid them you can stay on the right side of the law and avoid the potentially devastating consequences.
Mistake #1: Lack of Compliance
Compliance is a serious consideration in HR, whether it’s compliance with labor laws, documentation regulations, wage rules or any other number of issues. Practically every aspect of hiring and managing employees is governed by federal, state, or local laws in addition to industry practices, and failing to comply with them can leave you and your company vulnerable to fines, penalties, or lawsuits. Labor law is complex, and different rules may apply to different employees, so it’s important to understand which regulations apply and follow them to the letter.
Mistake #2: Outdated Employee Handbook
When was the last time your company’s employee handbook was updated? Do you even have an employee handbook? If your handbook doesn’t exist or is out of date, you are putting yourself at risk for issues related to employee performance, discipline, and unmet expectations. A comprehensive employee handbook outlines your expectations for employee performance and behavior as well as your employees’ rights. In the event there is an issue with an employee, the handbook will help justify disciplinary action (including termination) and provide some protection against lawsuits. Therefore, if you don’t have a current employee handbook, make it a priority to create one.
Mistake # 3: Incomplete Files and Documentation
Once you hire employees, the IRS, Department of Labor, and Immigration and Naturalization Services can request access to employee files to evaluate your compliance with rules at any time. If your files are incomplete or inaccurate, you may be opening yourself up to major problems, including expensive fines and penalties, or even hail time. However, documentation extends beyond required paperwork. Keeping track of employee contracts, performance evaluations, disciplinary actions, and formal requests will help you justify any actions you take, including promotions or termination. HR requires meticulous documentation, and scattershot or disorganized records will hurt you.
Mistake #4. Payroll Mistakes
Payroll is fraught with potential errors. Everything from misclassifying your employees to failing to pay the right amount of overtime to underpaying taxes will cause major headaches – including fines and penalties. You must understand exactly how to classify your workers, how to calculate wages, how to manage deductions, and the rules regarding how much to pay each individual, and ensure that everyone is paid accurately and on time.
Mistake #5: Vague or Incorrect Job Descriptions
Do all of your employees know exactly what they are supposed to be doing, who they report to, when they are supposed to be at work, and the skills and qualifications required for their jobs? If not, you could be setting yourself up for problems. Without detailed job descriptions, employees could decide for themselves what they are supposed to be doing, or have an unclear picture who is actually in charge. It’s also difficult to evaluate performance or issue disciplinary action without a clear set of expectations in place. Therefore, every worker in your organization needs a detailed job description, and job descriptions should be reviewed regularly to ensure accuracy.
Mistake #6: Poor or Nonexistent Training
Finally, to bring out the best in your employees and support peak performance, you need to provide comprehensive training. This begins with a thorough onboarding process, and continues with ongoing opportunities for growth and development. Leaving employees to their own devices is likely to create confusion and resentment, and is a major contributor to turnover.
As you can see, HR is an important function, and requires a certain level of expertise to handle properly. You may be able to successfully manage everything yourself if you only have a few employees, but as your business grows, engage professional help to stay on top of the changing and complex world of human resources,