5 Costly HR Mistakes That Companies Make & Implications
Far too many companies approach their HR functions reactively and only course correct after they’ve paid a hefty price for leaving undone what ought to have been done.
Sound HR practices are critical to your business, whether you are in the service or manufacturing industry or have 5 employees or 5,000 employees.
Being proactive with your HR functions means crossing all the ‘T’s and dotting your ‘I’s before they become serious problems. This is not just the only way to protect your business against costly legal claims but also the only way your business can grow and be sustainably successful.
This article looks at 5 common but costly HR mistakes that companies make and their implications for organisations.
Common HR Mistakes & Implications for Organisations
HR mistake #1: Hasty hiring and its implication
The adage “marry in haste, repent at leisure” aptly applies to making hasty hiring decisions; no mistake could be more damaging to the health of an organisation. When it is understandable that having critical positions that are unoccupied puts pressure on performance, hiring hurriedly will only end up causing more problems than it solves.
As we know, finding and hiring the right fit is a delicate process. From accurately crafting the job description to correctly assessing the right candidate (the individual with the right set of skills and mindset), to conducting an adequate background check, all the way to onboarding the employee successfully, a lot can go wrong with one misstep. Therefore, there’s no substitute for giving the hiring process the time and attention it deserves.
Let’s consider, for instance, the implication of a new employee working with an inaccurate job description. What can go right in this scenario? Unfortunately, nothing! An inaccurate JD will not only leave the organisation hanging high and dry with its needs unmet, but it will also cause even a top performer to flounder. In the end, hastily putting together a job description will negatively affect recruiting and productivity.
HR mistake #2: Failing to document performance issues
Failing to document an employee’s performance can make or break your ability to discipline, terminate, or fairly promote, reward, and recognise employees. The fact is that without proper documentation as an HR professional or a line manager, you will be less effective as a talent manager.
Performance documentation is vital because they offer a history of the employee’s improvement or failure to improve performance over time. Therefore it provides evidence that supports management decisions to take adverse action such as discipline or termination with an employee if need be.
Documentation also provides hard proof that an employee deserves an available promotion or opportunity over other employees who are also eligible. It justifies salary increases, decreases, or why an employee received no raise.
Ultimately, not only does documentation oil the wheels of your organisation by making it possible to track performance and take the required actions, in the event of a lawsuit, complete and thorough documentation protects your interests as an employer.
HR mistake #3: Incomplete employee personnel files
Consider this scenario: HR hired a procurement manager and told her that she had a three-month grace period to submit her guarantor forms. Two months into her employment, the procurement manager siphoned company funds allocated for office supplies and disappeared into thin air.
With no guarantors to hold liable, the question is, will the fact that she had not exhausted her three-month grace period to provide guarantors form a formidable defence for the HR professional that onboarded her? Your guess is as good as ours.
There are many risks attached to maintaining incomplete employee files for any period. Anything can happen, and the company will have nowhere to fall back on when it does.
In addition to the organisational efficiency gained by documenting employees’ performance history, for compliance purposes, it’s vital to have a binder for all valid documents that verify employees’ identities. Furthermore, keeping accurate records of documents such as signed acknowledgements and correspondences between the employee and the employer helps mitigate litigation.
HR mistake #4: A non-existent or outdated employee handbook
If your company doesn’t have a policy document that guides matters like employees’ code of conduct, employment and termination guidelines, nondiscrimination policy and compensation and benefits, you’re courting trouble.
No matter how big or small a business is, it must have an up-to-date employee handbook in place. Unfortunately, your business is exposed without a current guideline that spells out the dos and don’ts governing employee conduct in writing. A gap such as this means that your employees can do what they want and because there weren’t policies to hold them liable, attempting to terminate or discipline them would be a lot more tricky, as the risks of litigation are higher.
Be sure not to leave your business exposed; put in place policies to govern the most crucial rules in your business. It need not be complex; even a few pages outlining acceptable and expected behaviour is sufficient to protect your company by providing employees with tangible guidelines. When you draw up your employee handbook, it is crucial to keep it updated as often as required.
Best practices suggest that every two years is an excellent time to update your handbook, but this isn’t cast in stone. Furthermore, as soon as an update is made, all employees should sign an acknowledgement form stating that they received the publication and abide by its policies.
HR mistake #5: Indifference towards employee training
Focusing exclusively on the costs of training employees, too many companies ignore the fundamental question: what is the cost of not training an employee? This question is best answered by defining training:
Training and development have been defined as the continuous process of improving employees’ skills, helping them gain knowledge, clarifying concepts, and changing their attitudes through structured and planned education to improve their productivity and the organisation’s performance.
Given this definition, if organisations choose to see training as an expense and not an investment, they risk stunting their growth. Untrained employees will, inevitably, lack the skills, knowledge and motivation to do a good job, and we know what this translates to in the long run: your company and your clients will all suffer.
Taking time to train and develop your employees is a valuable investment in the future of your business. When thorough training is included in the onboarding process, your employees may become more fully engaged and understand how to use their skills to best benefit your organisation.
In addition, when you invest time and resources in seeing that your people get the training they need, it communicates that you value them. They will usually reciprocate by giving you their best.
If you need further clarification or require the help of our senior and experienced consultants to work with you in rectifying any of these errors, or if your business has special needs that require specialised intervention on how avoid bad HR practices, please reach out to us at hello@workforcegroup.com.
Nneka Eneli
Director, Workforce Outsourcing