5 Common Small Business HR Mistakes

February 25, 2019

Developing a solid HR strategy is just as critical for small businesses as it is for large corporations. However, far too often, smaller companies tend to focus more on their day-to-day activities and efforts to make a profit than on the strategies that would help their operation run smoothly in the long term. Without the backbone of good human resource management, your business will operate less effectively than it might, negatively impacting the very business growth that your day-to-day efforts are intended to achieve.

Existing HR requirements for small businesses are designed to benefit both your company and your employees while preventing you from running afoul of employment law. That's why it's crucial to understand the most common mistakes small businesses make when it comes to small business HR. When properly handled, each of these common HR issues can become a catalyst to developing a successful HR strategy that will help propel your company forward into greater growth.

1. Unclear, Unreasonable or Contradictory Job Descriptions

Failing to put enough thought into your job descriptions can attract the wrong candidates, encouraging them to apply for positions for which they aren't well-suited. This can quickly become a headache for you and an unwelcome challenge for them. After reading your job description, a potential hire should have a basic idea of what responsibilities the job entails, what will be expected of him or her, and what you are offering in return that will give the right candidate an incentive to apply.

Lack of thought, or sometimes too much thought, can also cause you to create job descriptions that are unrealistic. Often, these descriptions are little more than the recruiter's wish list of all the qualities that add up to the perfect employee, who doesn't exist. These unrealistic "requirements" will discourage most mere mortals from applying. Some are even self-contradictory without the employer realizing it. For example, most people are either detail-oriented and precise or they are fast and efficient. Rarely, if ever, will you find someone who is both, so why include such an unreasonable expectation in your job description?

2. Failure to Keep Abreast of HR Laws and Follow Them

Human resource law is constantly changing, which means that as a small employer, you need to find a reliable source of information and updates to let you know when these changes occur and how they affect your business. Your state's website is a good place to start as state labor laws vary from state to state. To help you seek out any municipal regulations that may affect your company, a list of local government websites is available at USA.gov. You can begin your search for information about federal HR laws on the Wage and Hour Division page of the U.S. Department of Labor website. Federal, state and municipal laws are all part of the complex HR legal landscape that small businesses must navigate to determine which laws apply to them, which don't, and what they need to do to remain compliant. Don't make the mistake of ignoring these laws. While some may not apply to you if your business is small enough or you meet certain other legal criteria, it's always better to be safe than sorry.

3. A Nonexistent or an Outdated Employee Handbook

An employee handbook should be a key part of your small business HR. This vital manual serves as a guide for you and your employees as it sets down your company's HR policies, procedures, rules and rationale. A well-planned handbook can help you avoid workplace problems and protect you from lawsuits when properly researched, written, implemented and distributed to employees. Equally important to carefully preparing your company's employee handbook is making sure you update it on a regular basis. Checking periodically to make sure your policies aren't outdated and that the regulations they are based on haven't changed will help ensure that your employee handbook continues to serve as a useful tool for your small business HR.

4. Failure to Make the Most of Your Human Capital

In a similar sense to your company's other assets, your employees represent a valuable resource that can benefit your business in multiple ways when you handle your talent pool wisely. Here are several areas that many employers fail to leverage to make the most of their employees' skills and abilities, making them less likely to decide to stick around for a while:

• Training employees
• Building a positive company culture
• Letting employees use their talents
• Offering opportunities for advancement
• Granting autonomy and empowerment
• Encouraging input, suggestions and feedback
• Treating employees with dignity and respect

Failing to take advantage of these opportunities is a waste of one of your company's most valuable assets, one that will cost you in reduced incentive, lower productivity, limited growth and high turnover.

5. Misunderstanding and Misapplying Overtime Rules

Every state has its own specific rules regarding the payment of overtime to employees who have rightfully earned it. Some states require overtime to be paid to employees who work more than eight hours in a single day while others require overtime only when an employee works more than 40 hours in a week. In some cases, there are additional variations on these rules, and in others, special situations may apply that nullify the above rules. As an employer, you need to make sure you understand the overtime rules as they apply to your state, your business size, your industry and, potentially, your individual employees, and you must make sure you are following them.

Each of the five common HR issues discussed above represents one way that many companies fail to meet the well-established best practices and HR requirements for small businesses in their state or industry. Since these lapses can be costly, you'll be happy to know that you can insure your business against any losses you might incur due to legal action related to many of these situations. While working on correcting these common HR issues, it would be wise to give Hiscox a call to address the gap in coverage.