Unless you are a sole trader, it is important to understand how to properly engage and manage staff in your business. There are federal and state labor laws that govern wages, staff hours, overtime and record keeping, and there are best practices to follow when seeking employees and hiring them.
What are the most common human resources mistakes?
- Rushing the hiring process: while you may save time writing a quick job description or taking the first candidate to come your way, you’re opening yourself up to a lot of risk. Taking the time to write a detailed ad and vetting candidates is the only way to ensure you find someone who is right for the job.
- Misclassifying contractors as employees: using contractors can be very attractive as a small business, as you have no obligation to continue using them and you can cease using them very easily. You must be careful however that they are genuine contractors, and that you are not inadvertently classifying an employee as a contractor. If you are not, you may find yourself liable for extra fees and penalties down the line.
- Not creating an employee handbook: having an employee handbook makes the expectations of your business clear to every new employee. It protects you against accusations of favouritism or special treatment, and it gives you a clear basis for disciplining inappropriate behaviour.
- No ongoing training or support: while ideally you will find staff who can handle their responsibilities adequately from day one, generally there is a period of settling in. Even after this point, ensuring that your employees are continuing to become more effective and productive is vital if you want your business to thrive.
- Failing to document performance issues: in the event you do need to terminate someone’s employment, it’s important to know that the law is generally on the employees side. For this reason, you want to keep detailed documentation of all performance issues leading up to termination, including the chances and options that were given to the terminated employee prior to being fired.
What sort of human resources roles should I consider outsourcing?
Depending on your background and strengths, you can consider outsourcing human resources. The most common roles outsourced are:
- Payroll processing: whether this falls in bookkeeping or human resources is a matter for debate, but with all of the taxes, deductions and reporting obligations in this area, it’s often wise to seek outside help.
- Recruitment: recruitment agencies specialise in finding the right people for the right roles, but they often charge hefty fees for the service. Regardless, if you lack the time or experience to ensure that you receive high value candidates, consider using a recruitment agent.
- Training and development: whether it’s a one off or a regular occurrence, training and developing your staff is generally far more cost-effective than seeking new employees.
The roles you will struggle to outsource as a small business are leadership and managing employees, unless you want to hire a business manager to handle day-to-day operations. If you choose to do this, you will need to find a competent, experienced manager that you trust, as this person will effectively be in charge of your business.