Business owners are still cutting corners to cut costs and stretching their staffs in an attempt to stretch their budgets, but a lackluster economy shouldn’t be the only thing affecting their business decisions.
When companies try to manage “on the cheap,” the result can be anything but savings. The price of cutting corners in HR can lead to escalated risks, decreased productivity, increased turnover and ultimately higher costs.
Risk of noncompliance
To mitigate risk and minimize costs, HR compliance should be a constant consideration for business owners. Employment laws govern how companies hire, schedule, compensate and behave toward their employees. Adhering to these and other government regulations is not just the lawful thing to do, but it’s also the smart thing to do to protect a business from unnecessary risks.
Federal wage and hour laws are one of the most common noncompliance violations for companies. According to one report, the average settlement per case is nearly $13 million.
Allegations include employers’ failure to pay minimum wage, unpaid overtime and inaccurate “exempt” or “nonexempt” employee classifications. Exempt, or salaried, employees are not eligible for overtime pay regardless of extra hours worked, while nonexempt, or hourly, employees can earn overtime.
Corporate anorexia and the cost of turnover In a lean economy, making do with less is simple common sense, but when companies try to operate with too little staff, the unhealthy result is what some experts call “corporate anorexia.”
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