Eight Common HR Mistakes Smaller Organizations Make

By Lynn Hounsley, President of Integrity HR, Inc.

Small businesses often have a Human Resources department of one, or Human Resources is one of many responsibilities of an office manager or business owner. Understanding all the applicable employment laws may seem overwhelming to a person in this position, resulting in HR mistakes that may have significant repercussions. Following is a list of eight HR mistakes common in smaller organizations. Are your Human Resources practices putting your business at risk?


  1. Failure to Understand Employment-at-Will

Many believe that they can fire “at will.” Unfortunately, case law doesn’t necessarily work in their favor.


  1. Designating the Initial Days of Employment as a Probationary Period

This can cause problems when that “really good” new hire turns out to be not so great and the company terminates him or her. By identifying the first 90 days as a probationary period, the company has indicated that the new hire is officially “off probation” as of day 91. The business now must show cause in order to terminate.


  1. Lack of Patience in Hiring

Small organizations rush through the hiring process and make a poor hiring decision resulting in additional cost for the organization. Avoid pre-employment testing or assessments; some organizations develop their own skill testing without realizing that in order to be effective, testing needs to be valid and reliable to be legally defended or at least only be “piece of the job” testing. In addition, some companies eliminate pre-employment drug testing to speed up the employment process. However, drug testing may lower risk-insurance premiums and assist with providing a healthy workplace for employees.


  1. Lack of Skill in Hiring

Many companies do not provide interviewing skills training for supervisors who are responsible for hiring. Without the skills to probe for information, good hiring decisions are a matter of chance.


  1. Using Another Organization’s Employee Handbook

Borrowing a book from a very different business, or is significantly larger, or is subject to unique regulatory controls. Perhaps the “borrowed” handbook was originally “borrowed” from another organization and may be out of date or not in compliance with current employment law. Additionally, sometimes policies and procedures may be difficult to administer, so supervisors either ignore or administer them on a haphazard basis. And employees, perceiving inequitable treatment, may take legal action or even undertake union organizing efforts.


  1. Poor Documentation Practices

Effective documentation is critical to the employment process. Many employment activities can be the basis for a discrimination charge–from when an employee is interviewed and hired to when the employee is terminated. To be effective, documentation must be accurate, consistent, complete and evaluated.  Lack of documentation, followed by incomplete or inconsistent documentation and poorly worded documentation, can create liability for the organization.

  1. Poor Employee Communications

Not all small to medium-sized organizations are challenged when it comes to people management. Many that excel do so because the CEO or owner is able to effectively provide employee coaching and feedback. But over time, this can quickly change as the organization grows and the CEO or owner loses direct contact with employees. In smaller organizations, employees are often promoted to supervisor without any previous experience or training. Even trained supervisors are not always comfortable with delivering bad news. Untrained supervisors struggle with delivering corrective feedback and may “sugar-coat” the information. Conversely, the untrained supervisor may avoid any discussion about performance or behavior improvement as long as possible, perhaps because he or she doesn’t want to make the employee “feel bad.”

  1. Lack of Knowledge of Employment Laws

Companies with as few as 14 employees are subject to 15 federal labor laws, not to mention state and local laws. An organization that grows to 50 employees can be covered by 20 federal labor laws! Small employers may believe that most laws only pertain to larger organizations, or they may simply be unaware of current employment law requirements since no one in the organization is actually responsible for assuring legal compliance. For example, many owners of small organizations are not aware of the requirement that I-9 forms be completed by all new hires.

Employment laws are often difficult to understand or interpret; they are subject to frequent change. They can vary from state to state, and new laws appear on a regular basis. Even the best-trained HR professionals are challenged to keep up with changes in employment law. Make sure you have a connection with a good HR Consultant or an Employment Law attorney to keep you in compliance.

The Inland Empire SBDC will be hosting the seminar “Human Resources Basics, Plus 2015 Labor Law Updates” presented by Lynn Hounsley on Tuesday, Feb. 17 at the Indio Workforce Development Center in Indio. Admission is free, sponsored by the County of Riverside EDA, co-sponsored by the Riverside County Workforce Development Centers. Register today to save your seat for this SBDC Training Event!

Integrity HR Inc. was founded in 2008 by Lynn Hounsley to support the “people management” needs of growing businesses.  Small businesses concentrate their efforts on the core business and the management of Human Resources can sometimes be a special challenge.  Lynn focuses on partnering with small to medium companies to ensure they remain compliant and resolve their employee issues to maintain a positive work environment and decrease their legal risk.

Looking to start or grow your business?

We at the Orange County Inland Empire SBDC, are here to help you with every aspect of your business to help it grow and become successful.
Give us a call at 1-800-616-7232 or schedule a quick, 15-minute intake appointment at ociesbdc.org/consultation to see how we can help you start, grow, and succeed.

Eight Common HR Mistakes Smaller Organizations Make

Mike Daniel is the network director of the Orange County Inland Empire SBDC Network, which assists aspiring entrepreneurs and current business owners throughout Orange, San Bernardino and Riverside counties. Mike was formerly the director of the SBDC office at Long Beach City College. As business owner and entrepreneur himself, he started his career as the owner of a Rocky Mountain Chocolate Factory location in Manhattan Beach and went on to open a second location in Long Beach in 2001. In 2007, Mike sold the Manhattan Beach store for an above-market offer then invested in several additional locations as a minority shareholder. Mike further expanded his candy empire with venture located in Shoreline Village in Long Beach called Sugar Daddies Sweet Shoppe, based on fill-it yourself candy options.

Mike has a bachelor’s degree in Business Administration from California State University, Fullerton.