If you poll business owners, two out of every three will list PEOPLE as one of the key challenges they face in managing their business. These types of challenges vary significantly from work performance to litigation. If your company is growing rapidly and is managed by a sole owner (you!), consider contracting human resource (HR) management services, such as those provided by TriNet, to avoid incremental administrative burdens or legal exposure. This article outlines the top five mistakes small business owners make when trying to manage HR without dedicated or external resources.
Mistake #5: Not Training Staff to Mitigate Exposure to Workplace Litigation
According to the Equal Employment Opportunity Commission (EEOC), race and sexual discrimination are the first and second most prevalent forms of workplace discrimination. But few businesses provide training regarding racial and sexual harassment, which opens the door to wrongful termination when employees leave their jobs. Studies show that a company’s legal costs in a wrongful termination lawsuit can run up to $85,000 and those winning plaintiffs receive judgments averaging $500,000.
Mistake #4: Not Complying with Current Benefit Regulations and Laws
The cost of compliance with benefits regulations is often a bigger burden for small companies, primarily because the associated overhead expense is spread over a smaller workforce. Keeping up with all the new regulations and changing laws can be daunting. Furthermore, compliance also poses an administrative burden to business owners. The required tests must be conducted, plan provisions must be properly applied, required notices and documents must be provided to employees, and all required government filings must be completed!
Mistake #3: Lack of Expertise in HR Policy and Procedure Implementation
For a small to medium-sized business, the human resource “department” is usually one person who wears many hats. This HR generalist may be responsible for compensation and benefits, labor relations, legal issues, staffing, training, and much more. An HR generalist who makes the wrong decision about a crucial employee issue — even something as simple as asking the wrong question in an interview — can result in significant consequences.
Mistake #2: Using Paper Instead of Software for HR Administration
With every new hire comes a mountain of paperwork. If a company doesn’t have access to online services and must deal with hard copies, errors can multiply. At each step, when information is transferred from one HR process to another, there is a chance of error. Multiply this possibility by the number of employees and the reams of paperwork, and that possibility starts looking like a probability.
Mistake #1: HR Functions Not Being Coordinated
Payroll data and benefits recordkeeping need to work in sync. If different vendors are employed for the payroll and benefits recordkeeping function, the small business owner is the one who must ensure that everything is coordinated and running smoothly. Working with a single software platform can help mitigate these coordination issues.
More questions on HR services? Contact Carlos Rubio at 818-207-8962 or [email protected].