HR for Small Business: 4 Tips to Avoid Expensive HR Mistakes

Written by Zac Johnson
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Making the leap from a self-employed or sole business owner to a multi-person company is a huge jump. When you first start tossing around the idea in your mind, it might seem like a great idea. However, there are definitely going to be many obstacles and challenges along the way — many of which you may not have even thought about.

When going from a single to a multi-person company, you will start to notice things like hiring, insurance, time-off, in-office politics and much more start to come into play. Many of these issues would be handled through an HR department within the company.

With that being said, if you aren’t sure how to run HR for small business, we have some nice tips to follow, while also avoiding some costly errors in the process.

There are approximately 5.6 million people who work in the Human Resources (HR) department. This department is broken down into recruitment, training, benefits and compensation, and other roles.

Although you may not work for a large company, small businesses need this department just as much. Whether you work for a well-known, large company or a small business, there are certain mistakes every HR employee should avoid.

Not sure what they are or how to avoid them? We’ve got your HR for small business covered. Check out these four tips to avoid expensive HR mistakes.

1. Watch Employee Overtime

When you own or work for a small business, you do much of the work in-house – unlike larger companies and corporations that outsource certain tasks.

While doing most if not all the work in-house gives an HR employee many hats to wear and future experience, it’s also hard to keep track of everything.

One of the biggest and most expensive mistakes many small businesses and HR reps make is not managing employee overtime correctly. If your human resources employee doesn’t know how overtime works, your business will suffer.

Not only your HR team has to understand the meaning of overtime, but it needs to know how it coincides with state laws. Make sure you classify employees correctly and ensure they get paid for all their working hours. Track each employee’s hours to avoid costly mistakes.

While it seems like a lot of information for just one aspect of the job, it’s one of the most important ones to follow. The Department of Labor will perform routine investigations, and any violation of these laws can cost your company a ton of money.

The best way to avoid violating these laws is to make sure that your HR team knows the state laws and keeps track of all employee hours, including any overtime worked.

Keep in mind, these laws apply to all employees – hourly or salaried. Using payroll services can make this process easy and stress-free.

2. Employee Handbook

Do you remember going through orientation for your first job? Even though it’s not the most exciting task, it’s extremely necessary.

One of the biggest yet most common mistakes businesses of all sizes make is having an incomplete employee handbook. Some don’t have one at all.

Think of it as your company’s bible. Without it, there are no rules set in place for employees to follow. This can not only cause safety hazards but result in legal action as well.

Take the time to create an employee handbook listing the rules each employee must follow. Some of these can include an attendance policy and vacation time. These policies should be consistent and easy to understand.

3. Anti-Harassment Policies

Speaking of employee policies, make sure you include an anti-harassment policy in your employee handbook. This could help your small business avoid a sexual harassment case. Plus, it keeps your employees feeling safe and secure in the workplace.

In this policy, make clear what makes up sexual harassment and how to report a violation if one occurs. While open-door policies are nice, it’s smart to have a plan B in place. This can include a violation hotline or a third-party HR resource.

If someone does report a violation, you should follow through with the policy and take action promptly. Having this document in place could save you thousands if not millions of dollars in the courtroom.

4. Employee Feedback

Okay, you’ve started your small business, wrote an employee handbook, and hired some great employees. Now what?

Although your business may have started off small, expect it to grow, especially if you’re doing a good job. As your company grows, make sure you’re not only retaining employees but also keeping them happy.

The best way to do that is to set up a feedback process. This is extremely important not only for your company’s growth but also for each individual employee.

Be open-minded and listen to the feedback you’re employees are giving you. It will help you better understand the work environment and correct any mistakes you may have made. This can improve work productivity and overall employee happiness.

HR for Small Business: Mistakes to Avoid

HR for small business can be challenging. There are many tasks to take care of and employees to consider. At the same time, you must focus on growing your company and solving everyday problems.

These four tips will ensure you avoid expensive mistakes that could cost you big bucks and affect your company’s reputation. For more tips on business and marketing, check out our website or contact us with questions!

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