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5 HR Mistakes That Could Have Serious Consequences for Your Small Business

Small business owners should be aware of these 5 common HR mistakes

Owning and managing a small business can be time consuming and overwhelming. You’re often required to perform a variety of tasks yourself, everything from marketing to human resources. With so much going on, it can be easy to get so involved in monitoring business growth that other tasks are pushed to the side.

In doing all of this, it becomes more likely that you’ll make a mistake that can have serious consequences for the company, particularly when it comes to human resources.

Check out these five common HR mistakes small businesses tend to make and find out how to avoid them:

1. Not having an up-to-date employee handbook.

Having an outdated employee handbook, or not having one at all, may cause an increase in employee violations of company policies. Having some sort of handbook allows the company to successfully communicate work-related policies to their employees.

It’s crucial that these policies stay updated, and that employees are made aware of any changes due to business growth or decline. It’s also a good idea to have employees sign a form that states they have read the handbook and understand everything that’s expected of them.

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2. Not documenting performance issues.

Failing to document employee performance issues can lead to unwanted lawsuits after messy terminations. Risk management includes preparation for a termination, which starts by documenting any and all performance issues.

Of course, employees should be given a chance to fix their performance issues, so it’s best to bring the issues up during performance check-ins. If the employee fails to correct their performance, termination may be unavoidable. Having thorough documentation of performance issues can serve as valuable evidence to avoid wrongful termination claims.

3. Not having an efficient hiring process.

From poor job descriptions to a hurried interview process, employee recruitment mistakes can be made. Creating a consistent interview process is key to reducing employee turnover. With $11 billion being lost annually due to employee turnover, it’s crucial to have an efficient hiring process and to stick with it. Considering having other employees involved in the hiring process will ensure that the candidate will be a practical and cultural fit for the company.

4. Not classifying employees correctly.

To avoid any penalties that may result from misclassifying employees for tax reasons, it’s important to understand what the difference is between an employee and an independent contractor. For someone to be considered an independent contractor, they have to fall under the following categories:

1. The company does not have the right to control what the worker does.

2. The company does not control the financial aspects of the worker.

3. The company does not have any written contracts for the business relationship.

5. Not properly training new employees.

Training opportunities should begin with an onboarding process and continue with professional development programs throughout employment. Employers can have peace of mind knowing their employees were properly trained and given the necessary tools to be successful in their positions and continue to grow within the company.

Having an experienced HR firm to assist you with all of your human resources will not only make your job easier, but will also allow you to focus solely on business growth and management. HR consultants can help you avoid these few mistakes and ensure you’re prepared for any issues that may arise.

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