HR For Small Businesses: 5 Common Mistakes To Avoid

HR for Small Businesses

The Human Resources department plays an important role in every business. Managing and treating staff well is vital for a business to flourish. The key to effectively carry out vital HR functions is to hire the right people to work in the HR Department. In this post, you will be introduced to five common HR mistakes your small business needs to avoid.

Outdated Policy and Employee Handbook

Policy and Employee Handbook is always a priority for every company. It should be in-place and all policies should be clearly defined before an issue arises. This will avoid problems and if there will be issues, they can be handled smoothly.

It is also important to update the handbook regularly to put new do’s and dont’s in the company on record. If you don’t put everything in writing, you could possibly find yourself in trouble eventually. You should review the handbook annually and if there are changes make sure that your employees sign the acknowledgement form signifying that they received the document and they will abide by the policies.

Misclassifying Employees

It is important to classify employees properly to avoid penalties. For legal and taxation purposes, you should classify if employees are paid hourly, are salaried overtime non-exempt or salaried overtime exempt. You must also learn to determine and classify an employee from a contractor.

Vague and Lacking Job Descriptions

Job descriptions are essential not just for managerial employees but to all employees in your company. A concrete job description will help them do the tasks that are expected from them. Also, it is a good tool to measure employee performance, which can be used for training and counselling. Vague or missing job descriptions can lead to an imbalanced workload, negative employee attitudes, and even employee conflicts.

Ignore the Importance of Training

Some of the small-scale businesses disregard the importance of training. Some recognise it but cannot provide the necessary training because of limited financial resources. However, giving training to your employees is really a good investment for the future of your business. Training will help your employees to gain full knowledge of their tasks and they will learn how to use their skills to the benefits of your company. Aside from improving competencies, employees will also feel valued and capable of providing more for the company’s growth.

Inaccurate or Incomplete Documentation

Documentation is really important if you want to save yourself from a headache and potential lawsuits. Aside from having a complete employee file, you should have everything documented especially when it comes to performance-based termination. When an employee commits a violation, always refer to your company handbook, and document everything thoroughly. You must also have enough evidence to support the incident. A proper due process should also be implemented. Though it may require a lot of time to do the documentation, you should not disregard this process and seek advice from qualified employment law specialists. All documents are important to support the company’s decision to terminate an employee, especially for unsatisfactory job performance.


Alex founded in 2015 to empower millennials to take control of their financial future. He is a former bond trader who is passionate about cryptocurrency, blockchain technology and investing.