Small businesses power the economy and account for over 99 percent of all businesses in the US, providing jobs to over 48 percent of American people. Least to say, small businesses are pivotal to the continued growth of the economy. Unfortunately, most businesses do not survive the first few years of operation because they encounter numerous problems such as fierce competition, regulatory issues, operational costs and high employee turnover.
The biggest issue comes from human resources. Problems such as workforce management, payroll generation, hiring processes, and workplace environment can put many companies out of business. This article will highlight some common HR problems that can be easily spotted and fixed.
1. Inefficient Hiring Process
Good employees are the cornerstone of a successful enterprise. The first step for any business is to acquire talented individuals and retain them for the long run. These candidates need to have a good grasp over their subject matter, enough experience, and the ability to understand the business’s overall vision.
Most small businesses do not define the traits of their ideal candidates and prefer to leave job descriptions with vague sentences that could be open to interpretation.
It is also important to develop a reliable process to screen, interview, and hire new candidates. Small businesses cannot realistically offer high salaries to employees, but they do have the ability to make robust decisions that larger enterprises cannot. It is important to use this as a hedge against stiff competition to acquire new talent.
2. Lack of Documentation When Dealing with Employees
Many small businesses do not feel the need to keep checks and balances when it comes to relationships with their employees, preferring to communicate important instructions and details in an informal manner.
These companies often give and take feedback from their employees without appropriate documentation. While it is a good idea to frequently give feedback to employees, it can prove to be legally detrimental in the event that employees who haven’t been performing up to par are let go, and they decide to file a lawsuit. The lack of documentation could just be enough to put the company out of business.
Small businesses can face various issues if they adopt a more casual approach to employee feedback, relying primarily on verbal communication. The best way to minimize liability is to document the feedback given to employees.
In case a disgruntled employee files a lawsuit, your organization will always have a paper trail to demonstrate that you made decisions based on the employee’s poor performance instead of discrimination or other controversial reasons that could be used in a court against you.
3. Not Putting up Workplace Policies
Small businesses don’t always issue workplace policies to their employees. This puts them at risk of lawsuits and employee management problems. It’s best to just issue employee handbooks that describe in detail workplace policies such as the code of conduct, disciplinary procedures, and details related to payroll generation, leaves, and other matters. These details should be written in plain English, updated as needed, and constantly reviewed by the HR experts.