Costly HR mistakes to avoid
Poor sales aren’t the only driving factor that can break a small business. Bad human resources (HR) practices can also have a negative impact on a company’s bottom line.

Neglecting important areas like recruitment, employee relations and government compliance can be damaging to even the most successful businesses.

Here are some of the top mistakes small businesses make when it comes to HR, and how to avoid them.

Hiring the wrong person
According to the U.S. Department of Commerce, more than 30 percent of all business failures can be linked to bad hiring practices. When a position needs to be filled quickly, many businesses tend to make poor hiring decisions. And trying to terminate the wrong employee can be a difficult process. With approximately 450 employment lawsuits filed every day, firing someone should not be taken lightly. When handled improperly, business owners can find themselves tied up for long periods of time in frivolous lawsuits.

It’s crucial for a small business to devote enough time and resources to ensure the most qualified candidates are hired. Employees are the heartbeat of an organization. Careful consideration should be given before selecting just anyone who walks through the door.

Ignoring government regulations
Staying on top of the growing number of ever-changing government regulations is overwhelming and time consuming. But most companies, particularly small businesses, can’t afford to look past them. Research has shown that small businesses with fewer than 20 employees pay more per employee to comply with regulations than a company with 500 or more employees.

While smaller companies are dealing with increasing regulatory burdens, the staggering fines and penalties for not complying can easily cost tens of thousands of dollars, and sometimes the business itself.

It’s imperative to keep up with local, state and federal regulations on an ongoing basis. There are many resources available to help business owners stay informed and compliant. Many local and national organizations, including small business advocacy groups, have information and support available on the Internet.

Not having an employee handbook
When a company doesn’t have written policies and procedures that are accessible to all employees, problems can unfold in the workplace. Unnecessary stress and tensions arise when employees don’t know what is expected of them, oftentimes leading to conflict.

All companies, regardless of size, need an employee handbook. It should clearly state the company’s expectations and provide clarification on important business operations. All employees should be given a copy and sign an acknowledgement upon receiving it. Without an employee handbook, businesses are setting the stage for employee relations’ disasters and potential employment litigation.

Overlooking the importance of training
Not providing employees with opportunities to hone their skills is wasting a chance to improve productivity and job satisfaction. In order to stay ahead of the competition, employees need to be up-to-date on the latest developments in their respective fields.

Regardless of budget constraints, businesses need to invest and support training and development efforts. Whether it’s continuing education, leadership or skills-based training, it’s important for employees to bring fresh ideas and new approaches to performing their job. The time and money invested will go a long way toward employee retention and the bottom line.

Failing to reward employees
Whether a company has one or 50 employees, it’s important that every person knows his/her value to the organization. Many employers forget this important component of employee relations. Sometimes a verbal compliment isn’t always enough.

In order to retain good employees, companies must recognize and motivate them. A solid performance management system can help improve retention by providing employees with incentives to achieve written goals. The boost in morale helps to alleviate the headaches that come when an employee leaves for better opportunities.

PEOs can help prevent mistakes
To help avoid many of these costly blunders, more and more companies are turning to a professional employer organization (PEO). A PEO serves as a human resources department for small and medium-sized businesses.

By entering into a co-employment relationship with a PEO, companies have access to experienced HR specialists who can help with many time-consuming HR tasks. A full-service PEO like Essex HR can provide administrative relief in areas such as recruiting and selection, payroll management, employer-liability management, training and development, benefits management, government compliance and more. In addition, a PEO shares many of the employer liabilities that come with owning a business.

With the help of PEOs like Essex HR, small and medium-sized companies don’t have to keep making costly mistakes. Instead, business owners can rely on a PEO to provide the resources and support they need to help the company succeed.

Wishing you many happy returns,

Dr. Wayne T. Essex