Last week, we covered the first four of the most common HR mistakes we see small business owners make, how to avoid them, and how to correct any that you have already made. This week, we are back with the next four mistakes we see being commonly made.
Just like it was with Part 1, this isn’t meant to point out what you’re doing wrong, or make you feel bad about them. Instead, at Employers Resource, we want to equip you with the knowledge and skills to make the best choices for your business so you can be as successful as you deserve to be!
5. Failure to Document
In Part 1, we mention in the disciplinary process section that the palest ink is better than the best memory. When it comes to HR mistakes, failure to document is a big one.
In the HR world, if it isn’t written down, it didn’t happen.
Employees will break policies. You can count on it. After this happens and it is time to help them correct the behavior, it is important that you document everything in order to backup your decision. This will protect you and your organization.
Here are some tips to consider for effective documentation:
- Be consistent.
- Be specific.
- Write in a clear, factual manner.
- Avoid emotional content.
- State the consequences.
- Ask the employee to sign and date the document.
- Give employees an opportunity to respond.
6. Failing to Train Supervisors
Front-line managers have an enormous impact on your company. They affect employee performance, happiness, productivity, and retention. If you’re interested in making profits, it is critical to invest in training your managers. Mary Gersema, our COO discusses the importance of training in this article. She makes the point that in order for your managers to be ready to step up and handle whatever is thrown their way, it requires training. Great training is invaluable.
Managers can be as damaging as they can be empowering for your organization. Take the time to properly train them.
- Supervisors are the eyes and ears of the company (they are extensions of and represent upper management).
- Can set policy (telling an employee “we are going to work & grow old together” can alter at-will status).
- Can set precedent (if a supervisor gives an unpaid leave to 1 EE for funeral, then must do the same for all EEs).
- Should be trained (you want to keep procedures such as discipline consistent throughout the company).
7. Employee Handbooks
Every employer should have an employee handbook. If you could protect your business from unnecessary risk, would you? Of course you would! Creating and implementing and Employee Handbook for your organization is one of the most basic and effective ways employers can protect their business from unnecessary risk. It clearly explains workplace policies, it helps in setting expectations of how the employees should act, it defines the pay structure, it covers employer legal liability exposures and every employee gets the same information thus establishing consistency across the organization.
Here’s a few more reasons you should have an employee handbook:
- Communicates to employees what is expected of them.
- Provides employees with a clear understanding of their responsibilities.
- Serves as a compass for the organization’s policies and procedures.
- A well written handbook serves as legal prevention and protection for the employer as long as it is consistently applied across the workforce.
- At-will employment.
- Employee theft and fraud.
- Failure to terminate during training/orientation: why keep a problem when you don’t need to?
8. Employee vs. Independent Contractor
Who is an employee?
The issue of what makes up an employee is one with many factors to look at and questions to answer. There is not one specific thing to look at. Instead, what makes up an employee depends upon the totality of the circumstances surrounding a worker’s employment.
Here are some of the factors to look at:
There are independent contractors (or 1099 workers) that fall under different regulations and requirements than a standard W-2 employee. Knowing what makes a someone a 1099 employee, and the difference between these two classifications is incredibly important, as misclassification of independent contractors is a serious issue that can cause big issues for your business.
We will give you some quick information here, but if you would like to go more in-depth about independent contractors and employees, make sure to check out our recent ebook about these classifications!
Here are two tests to help you decide whether your worker should be classified as an independent contractor or not. While these tests are both very helpful in making this classification, they are not the only ones you should look at. They are are great place to start, though!
FLSA 6 Prong Test:
- Extent of work performed by the independent contractor
- Workers managerial skills affect his/her opportunity for profit or loss of company
- Does the worker invest in facilities/equipment?
- What is the worker’s skill and initiative?
- Permanency of the relationship (ie. do you work with them every day?)
- Nature and degree of control by the employer.
IRS 3 Prong Test (Darden Factors):
- Behavioral control of the organization over that independent contractor
- Financial control over them (providing tools, uniforms, vehicle)
- Relationship of the parties
The government has been strengthening its enforcement of these rules in recent years. This means it is incredibly important for you to make sure you are doing everything the right way. Otherwise, you could end up facing all sorts of trouble that you don’t want to deal with. This doesn’t only relate to the the federal government, either. You need to also be aware of any state-specific laws that apply to you, as well.
There are many employer minefields to navigate. Hopefully this two-part series on common HR mistakes has served as a 10,000 foot view of important considerations for employers and creates an awareness of potential legal pitfalls that you may encounter.
Armed with this information, we are positive that you can transform any of your business’ prior mistakes into wins, and be even stronger moving forward!