Avoiding Trouble. In too many organizations, human resource issues are resolved "on the fly." This can lead to trouble. Be sure to watch out for these HR pitfalls:
Finding solutions. According to the U.S. Small Business Administration, an average small business manager spends up to 25 percent of his/her time on employee-related administration and paperwork, including benefits, workers' compensation and payroll. However, most people lack the necessary HR expertise to meet the demands of being an employer.
HR management includes dealing with performance issues and ensuring your personnel and management practices meet various state and federal regulations. Proper human resources planning can also provide your company the strategic support it needs to deal with succession issues and expansion. Together with your marketing and financial plan, HR planning is integral to achieving your organization's objectives.
If your organization is small, you can probably handle the duties yourself, with the help of a service like iWorkwell. iWorkwell provides the tools and knowledge you need to do HR correctly, and immediate access to top HR experts.
The first step to achieving HR success is understanding the various components:
Remember, any HR plan should exist to support your organization's goals and is an essential component of your overall business strategy. A careful eye on planning can only bolster your bottom line.
HR Pitfalls:
- No Policies and Procedures: Don't wait until there's a problem with an employee before you put a handbook together. You should have written employment policies in place before you hire your fifth employee.
- Misclassifying Employees: Do you know the difference between an exempt and a nonexempt employee? The federal Fair Labor Standards Act of 1938 governs minimum wage and overtime for employees. In 2004, the Department of Labor established new regulations about categories of workers who are exempt or non-exempt from these requirements. The workers who are exempt from overtime pay — who meet the defined criteria and salary tests — are: executives, administrative employees, learned and creative professionals, computer professionals, outside sales personnel and highly compensated employees. The Department of Labor oversees wage and hour claims. Violations can result in the award of back pay and liquidated damages as well as penalties for non-compliance.
- No At-Will Employment Clause: An at-will employment relationship is one which can be terminated by either the employer or the employee at any time, so long as the termination does not violate laws prohibiting discrimination, whistle blowing or other types of retaliatory discharge. In the absence of an employment contract for a definite period of time, a collective bargaining agreement or other promise of continued employment, the relationship is presumed to be at-will; however, various states' employment laws contain the term "at-will" employee, and many states have exceptions to the employment at-will status. Handbooks or other written employment documents issued by the employer should contain the "at-will" language to avoid any unintended promises of continued employment.
- Poor Documentation: Prevent legal troubles by keeping honest, accurate and legally sound written records. Documentation should include: application for employment, any performance reviews and consultation reports, attendance records and any agreements that have been signed by the employee such as trade secrets or non-disclosure agreements.
- No Performance Appraisals: A lack of a sound performance appraisal can come back to haunt you, especially when dealing with difficult or poor performing employees. It's not enough to have performance documentation. That documentation should be clear and void of personal bias.
- Waiting Too Long to Discharge an Employee: An easy trap for employers to fall into is keeping a problem employee. After repeated warnings and disciplinary actions, it is time to let go. Protect yourself by establishing and following a discipline process. Set expectations and follow through on your stated policy.
HR Components:
Staffing. A basic part of HR, this involves bringing new people into your organization and making sure they are productive additions to your team. Some of the issues you must understand and deal with in regard to staffing are:
- Staffing Alternatives — What are your staffing options (e.g., full-time, independent contractor, temporary help) and how do you determine which are best for your business?
- Recruiting — Depending on the position, replacing a full-time employee can end up costing tens of thousands of dollars. Knowing how to identify and attract the most qualified candidates is one of your biggest challenges.
- Downsizing & Termination — The process of terminating employees can be uncomfortable for both employer and employee. Understanding the issues and laws will help you prepare better and minimize the stress involved. To protect against discrimination charges, use objective methods to determine which employees will be laid off.
Compensation. Compensation consists of more than salary. It can also include commission, bonuses and stock options. An effective HR plan balances cost against what your employees perceive as their value. The plan also measures compensation levels against other employees within the organization, against employees outside the firm in similar positions, and against performance. Major compensation issues include:
- Salary/Wages — How do you determine what each job is worth? How do you create salary ranges and a pay increase structure? What is the difference between an exempt and a non-exempt employee?
- Payroll — Should you do payroll in-house or outsource it? Do you fully understand the rules on record-keeping and payroll administration?
Benefits. An attractive benefits package is one of your most useful retention tools. Understanding the cost vs. value of the benefit options is essential to a successful business. Benefits can be split into two categories:
- Core Benefits — Paid time off, health insurance and retirement plans.
- Fringe Benefits — Tuition reimbursement, flexible spending plans and disability insurance, among others.
Legal/Legislative Issues. Employment laws change almost daily. Be sure to stay informed in order to avoid fines and lawsuits. There are regulations and laws covering almost every aspect of your business. Do you know what to do if one of your employees complains of harassment? Do you have a policy for taking corrective action when an employee breaks a rule? Do you understand the tax laws governing your business?
Health & Safety. Do you know if your organization is subject to mandatory OSHA regulations? Maintaining a safe workplace not only helps you avoid fines and costly lawsuits, it can also save you thousands of dollars in absences caused by injury and illness. In fact, implementing a wellness program for your employees can help reduce sick days and improve morale.
Employee Relations. For your organization to thrive, you need the tools to improve performance management, build great teams, balance work & life issues, handle difficult situations, establish workplace ethics and more. Do you have an employee assistance program? Are your performance evaluations designed to help improve the business, or do your employees just look at them as a necessary meeting before getting a raise?
Diversity. It is no longer as simple as paying more money to get better qualified employees. People want to know that the organization they work for respects them and will not discriminate. Do your policies ensure retention of your best employees?
Training, Education & Development. As your business grows, your workforce needs to keep up with the changes. Have you performed a needs' assessment to establish what kinds of skills your employees need? Do you have a succession plan or a mentoring program to help groom younger employees for future management positions?
HR Technology. Can a Human Resource Information System (HRIS) be useful in your business? HRIS helps automate your administrative work. It can allow you to electronically consolidate all of your HR-related databases, eliminate manual forms and track information such as employees' benefits, compensation and performance appraisals. In addition, you would be able to monitor your staffing needs and reduce your recruiting costs through automation and the use of online tools.
