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Could These 5 HR Mistakes Be Hindering Your Small Business’ Growth?

Owning and managing a small business can be time consuming and overwhelming.

You’re required to perform a variety of tasks – everything from marketing to account management to even physically shipping product. With so much on your plate, it can be easy to get so involved in monitoring business growth that other (even critical) tasks are pushed to the side. The more you try to juggle all these tasks by yourself, however, the more likely it becomes that you’ll make a mistake.

But did you know that human resources is one of the areas of your business where it’s easy to make mistakes that can have serious consequences for the company?


Executive Guide To HR Outsourcing


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

Mistake #1: Not having an up-to-date employee handbook.

Having an outdated employee handbook – or worse, not having one at all – may cause an increase in employee violations of company policies, and leaves your organization open to potential claims and suits. Having some sort of handbook allows the company to successfully communicate work-related policies to their employees.

It’s also 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.

Mistake #2: Not documenting any performance issues.

Failing to document employee performance issues can lead to unwanted wrongful termination lawsuits after messy separations. Risk management includes preparation for a termination, which starts by documenting any and all performance issues, and even using a progressive discipline process to help streamline the process.

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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 unlawful termination cases.

Mistake #3: Not having an efficient hiring process.

Owning and managing a small business may lead to serious HR mistakes that could harm business growth.From having poor job descriptions to having a hurried interview process, employee recruitment mistakes are easy to make. 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.

For example, hiring managers might consider including other employees in the hiring/interview process (other than the direct supervisor for the position) to help ensure that the candidate will be a good cultural fit for the company.

Mistake #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 differences between an employee and an independent contractor. For someone to be considered an independent contractor, they have to fall into the following categories:

  • The company does not have the right to control what the worker does
  • The company does not control the financial aspects of the worker

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

To learn everything you need to know about the differences between employees and independent contractors, check out the recording of our webinar: Employees vs. Independent Contractors.

Mistake #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.

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HR consultants can help you avoid these mistakes and ensure your business is prepared to deal with any other issues that may arise.

Having an experienced HR outsourcing 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.

Executive Guide To HR Outsourcing

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