Many small businesses think that they are too small to think about human resources. Maybe it’s because they only have a small number of employees and there is no need to worry about it. Since smaller companies don’t have their own HR department, this topic isn’t always top of mind.
For the small business owner reading this, it is normal that HR isn’t top of your mind. You wear many hats in your business, and what we have found is that HR is a hat that’s worn, only when an issue arises. What we have found is that since small businesses aren’t big enough to have their own HR Consultant, they attempt to solve the problem on their own. They typically will go to the internet to search for some help. Yes there are times when the problem is solved. However, there are times when the problem doesn’t get resolved, and can get bigger, or the HR problem turns into a very serious issue.
So even if you are a small business of 5 employees, or 25 or 50 you must have HR in your business. When you first start out, HR won’t be a large part of your business, and it will grow as your business grows. What’s important is to ensure you set it up right the first time so if issues arise, you have something in place to allow you to get through it.
There are 5 HR mistakes small businesses make – but when set up properly ahead of time will set you up for success, right of out the gate.
Mistake #5 – Unstructured Salary increase plan
Some of you who have 5 or 10 employees think that having a salary plan or structure isn’t needed. Now you won’t need to go through an extensive process, but you do need to think about how and when you will give your employees increases to their base salaries. Will they get an increase that’s only based on their job performance? Or will it be based on their job performance and company performance? Are you able from a financial standpoint to increase their salary every year? If you have given them an increase to their salary the past 2 consecutive years around December is this an expectation you want to set?
The small business owner needs to think about internally consistency and how you compare to the external job market. So, at some point in your business you will have more than 1 employee doing the same job or similar jobs. The last thing you need is to have a few employees doing the same or similar job, but getting paid very different amounts in comparison to one another. Don’t forget to ensure you are competitive with what the market is paying for the same or similar jobs.
Mistake #4 – New hire training is poorly done or not done at all
SHRM in 2017 conducted a survey and 20% of new hires left within the first 45 days being hired! So they barely stayed for half of their first 3 months of being in the job. In the last year or so, we have heard stories from clients and colleagues in the industry of times when employees leave before 3 months is up because they received little or no new hire training.
You might think that as a small business owner that new hire onboarding is just for the larger companies. We at MKS HR feel that’s not true. New hire onboarding doesn’t have to be an intricate plan. It can be as simple as having a 90-day training plan.
Mistake #3 – Hasty hires & inaccurate job descriptions and job ads
A 2013 CareerBuilder survey polled over 6,000 HR professionals and 27% reported 1 bad hire costing more than $50,000! Yes, you read that number correctly and yes that was for 1 new hire. For small business owners we know that is a lot of money so getting the right hire the first time is crucial.
We also know that for smaller businesses, the sense of urgency to fill a role is high because your team is small and feeling their workloads get bigger by the day. However, if you rush the hiring process because you need to fill that seat quickly, then you will run the risk of making a bad hire and having any warm bum in the seat.
Having an accurate job description and job ad is an important component to doing the hiring process correctly. If this step isn’t done properly then you will get the wrong type of people apply to your job.
Mistake #2 – Not documenting performance issues & not having crucial conversations
At MKS HR we see this mistake happen a lot and while it can be highly administrative and time consuming to document and have the important conversations, it is so vital for HR in your business. Without having a conversation with an employee about their performance and documenting it, how are you able to defend yourself if you ever get into a situation where lawyers are involved? Always remember as the business owner it is your responsibility to have the policies and procedures in place and to document EVERYTHING when it relates to your employees.
Mistake #1 – Outdated employee handbook (or a non-existent one)
This is the biggest mistake that small business owners can make, and again you do not need a huge employee handbook. However, if you have 5 employees in your business you need to have policies to ensure you are following current employment legislation and other policies that we feel any business, regardless of size, should have. Again, if you don’t have policies in place how will your employees know what is expected of them?
Also keep in mind that as your business grows & you hire more employees, your policies will change and evolve, and new ones will be added. When ever there is a change in legislation it is your responsibility as the business owner to keep your policy handbook up to date. Also, when you do make a change to any policy, it’s not enough you update it, print off a new version & insert into the binder. You must communicate those changes to your employees. This means you need to talk to your employees to tell them of the new changes, get them to read the new policy and get them to sign off on that change. So, each time you update a policy, communicate it to them, have them read it and have a sign off at the end of it for the employee to sign.
Wondering if you are making any of these HR Mistakes? Click here to book a free consultation with MKS HR.