Employees are among the most important resources for every business. The performance of the employees will directly affect the output of your company. Therefore, for your small business to succeed, you need proper human resource management. However, many small business owners focus so much on marketing and growing their business and ignore the human resource. This not only affects the operations of the company but could result in lawsuits where employees’ rights are not met. This article highlights some of the key HR mistakes that small businesses make and how you can avoid them.
No Employee Handbook
The first mistake small businesses make is not having a handbook. This is basically a simple document that employers use to show the employees what they should expect from the company. Some of its key components include company policies, a code of conduct, laws governing your business, employee rights, benefits and termination among others. While a handbook is not a legal requirement for businesses, having one has two key advantages; one, with a handbook it will be easier to reinforce workplace rules; two, you can use the document in your defence in case of a lawsuit by your employees. Therefore, ensure you have a comprehensive one and update it regularly as your company grows. Also, make it a requirement for every new employee to read and sign the document.
Flawed Hiring Process
When you hire employees hurriedly and without a clear plan, you not only risk hiring unqualified individuals, but you may also hire untrustworthy people. In addition to a set of general hiring guidelines for the company, you should take your time to craft a comprehensive job description. Finally, don’t forget to come up with good interview questions and do thorough background checks. Rushing through the process may save you time and money in the short term, but you will end up incurring so much more when you hire someone who is not a good fit for the job. According to a press release by The Recruitment & Employment Confederation, a bad hire for an employee who earns £42,000 will cost a company more than $132,000. The website highlights increased staff turnover, lost productivity and money wasted on training as the three major hidden costs of hiring mistakes.
Misclassifying Employees
Misclassifying employees is another HR mistake that can cost your company lots of money. When you misclassify your employees, you will face huge penalties for incorrect tax information. Therefore, avoid classifying your employees as contractors and maintain a proper documentation to ensure taxes are filed correctly and on time.
Not Documenting Employee Issues
Whenever you have an issue with an employee in your company, ensure that it is documented. The documentation will help in case there is a dispute in the event of termination. However, you should give your employees second and third chances, and support and correct them before considering termination. Some employees can be slow starters but grow with time to be the key performers in the company. However, if performance issues are persistent and slowing down your company, it is best to let the individual go.
Ignoring Employment Rights and Labour Laws
These are laws and guidelines that are meant to protect employees. Violating employee rights and labour laws will attract huge fines and penalties. Additionally, it can create a bad image for the company when word gets out on the streets. Therefore, take your time to familiarise yourself with laws governing employment in your country before you start the hiring process. If they seem complicated, consider asking for help from a legal expert and come up with a plan to ensure your company is compliant.
Lack of Proper Documentation for All Employees
Each employee in your company should have a file with personal details and work related documents. Some of the key components of an employee file include contact details, address, CV, job description, signed employee handbook, performance evaluations and a signed contract among others. Medical records are private and thus should be stored in a separate file.
Not Investing in Employee Training
By training your employees continually, you will boost their performance. Good performance by the employees will lead to better output and profitability for the company. Managers too should take some courses that will equip them to be better leaders. You can learn more about training courses for managers and supervisors at the BCF Group. They have a couple of courses such as the ILM level 5 coaching course that is designed for all individuals involved in people development.
Most of these mistakes can be avoided when you take your time to learn and plan. As a small business owner, you can handle human resource issues by yourself while the business is still young. However, if you have too much on your plate, consider outsourcing. Outsourcing is cheaper when you have few employees. Then, as your business expands and the workload gets bigger, hire an in-house human resources manager.
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