There are many business processes to juggle when managing a company. Finances, marketing, sales and then there are your employees. Managing the people side of the business is one of the major time-consuming activities you must juggle. This includes making decisions on employment practices. Making mistakes in this area can be costly, consuming and draining on your company and your people.

These are the most common mistakes business owners and managers make when managing the human resource functions:

1. Misclassifying Employees– Classifying employees correctly as exempt and non-exempt can be very confusing. Non-exempt employees are eligible for overtime pay, while exempt employees are paid a flat salary. Another area of misclassification relates to independent contractor versus employee status. Independent Contractors are responsible for paying their taxes while a portion of an employee’s taxes are paid by the employer. Misclassifying employees can lead to fines and back payment of overtime wages and taxes if incorrectly calculated.
2. Not Hiring Right- The recruiting and hiring process can be daunting and difficult for many managers. Not hiring the right person for the job is very costly and disruptive to business operations. Developing recruiting and selection strategies and processes can improve your hiring results.
3. Not Having Clear Job Descriptions– The job description is the beginning of the employment engagement. The job description is used to create a job posting and evaluate job candidates. During employment the job description is used as a criterion to evaluate performance. Not having clearly written job descriptions cause ambiguity in your decision-making process and potentially lead to unfair employment practice allegations.
4. Not Having an Employee Handbook– Employee handbooks are absolutely essential. Not only do they outline the employee’s rights, they also codify the employer’s expectations. Employee handbooks also give the business legal justification for termination and limited protection from discrimination lawsuits. Employee handbooks should be written in compliance with federal, state and local laws to avoid legal complications.
5. Not Addressing Employee Performance Issues- If you have employees with performance issues, you should not ignore them. Ignoring them can affect may areas of your business including substandard work, poor customer service and employee morale. Create procedures to address these with appropriate forms to document performance issues.
6. Incorrectly Paying Employees– Some of the errors include paying employees incorrect overtime, not allocating tips accurately and improper wage deductions. It is essential that your payroll administrator know the state and federal rules that apply to payroll.
7. Lack of Knowledge of the Employment Laws– Knowing the various employment laws and regulations and ensuring compliance of these laws are crucial to managing risk. Identify someone in your organization or hire an outside consultant to keep you apprised of these laws and monitor changes.

Can you afford to drop the ball when it comes to managing your human resource functions? Probably not, therefore business owners and managers should evaluate these risky areas to avoid making these mistakes. If errors are detected, correct these immediately and document your new processes to prevent them from occurring again.

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