5 things new business owners fail to do with their people…
Owning a business is often described as the most exciting thing one could ever pursue. Through the development of a product or service and helping it grow and expand is a roller coaster in and of itself. As if dealing with the twists and turns of product development wasn’t hard enough, you face the very same challenges in a different capacity with people operations and management. It is easy to forget (or not even realize) the importance of certain processes needed to support your people and remain within compliance. Things like employment classification, employee compensation research, organizational structure, hiring decisions, and documentation are all major topics to consider and are often easily overlooked by business owners. The impacts on failing to properly execute these processes are significant (and not in a good way).
So without further ado, let's dive in!
1. Fail to classify appropriately:
Full time? Part time? Independent Contractor? What’s the big deal? New business owners (in startup or otherwise) naturally want to simplify certain processes in an effort to focus more on their products or services. Properly classifying your employees is not an area you should be cutting corners in.
Hiring independent contractors is the most appealing because it alleviates much of the responsibility to the employer. However, it is not always legal to do. An absolute basic rule of thumb is that if [this person] makes a significant contribution to the operations of your business, you need to hire them as a traditional employee, full or part time! What I mean is this: if you own a landscaping business and you need a web designer, this person could likely be an independent contractor since web design clearly falls out of scope with landscaping. However, your lawn care techs should be direct hires. There are a lot more points to consider in evaluating what kind of employee to hire. For more info, consider reading THIS.
2. Fail to compensate for the value of your employees:
Reducing operating costs is every business leader’s biggest pain. How do we do more with less to maximize our profits? Well…giving your employees pennies of fair market value is not going to cut it. And those ping pong tables and in-office game consoles you consider a “perk” are not as cool as you think they are.
With all that being said, consider that “compensation” may not always mean “money in the bank”. You can “compensate” employees in a variety of different ways so long as the monetary value does meet or exceed federal requirements by law. Some examples would include health insurance, reimbursement of some “perks” (gym, home office supplies for remote workers, mileage/public transportation, etc.). Get creative! This all factors into a “total rewards” program and, when developed correctly, will keep your competitors on their toes since your own employees could be less likely to leave.
Of course, you could just PAY FAIR WAGES! The Department of Labor offers some great public resources on reported salaries for just about every profession available. Do your due diligence and research, your employees will appreciate it and your business will see results too.
3. Poor organizational construct:
This is important! It goes beyond simply creating jobs. Who reports to who? Who is responsible for certain processes? These are lanes of control. Without them, its just a free-for-all of chaos in your business with a lack of accountability and likely a loss of a lot of customers. Who would give their money to the disorderly and risk losing something they invested in?
If I’m being honest, expect the need to review your organizational construction quite frequently during various stages of your business lifecycle. No company is immune to the need for organizational change, no matter how large, small, old, or young it is.
4. Poor hiring decisions:
Recruiting can get costly. Whether you decide to DIY, consult with an agency, or something else, you could be spending thousands on ONE position between fees, job board sponsorships, and your own TIME. Not to mention the time and resources potentially wasted while a position is left vacant. Impulse shopping might work for you personally but impulse hiring is sure to fail and hurt your business.
Be calculating and hire with purpose. Know what it is you want them to do and prepare a written job description in advance. Post the job in places that are most likely to attract the talent you need. Sites like Indeed are generally all-encompassing but still fall short in many ways. Oftentimes, the talent you need is hard to find so you’ll need to do some serious campaign targeting.
5. Horrible documentation (or none at all!):
There is a frequent (and valid) saying in HR: “If it is not documented, it did not happen!” This point of documentation goes beyond just disiplinary documentation. It is everything documentation. Payroll records, employment paperwork, discipline, successes, anything!
Payroll records and employment paperwork (such as I-9, for example) are required to be help for a certain period of time. How long will depend on when this person was hired or left the company (for any reason). Some documents just expire and can be properly disposed of regardless of their employment status with you.
Be sure to maintain a proper filing system to keep all these records. At anytime, you could face an audit and failing to produce the required records could result in fines of thousands PER CASE/EMPLOYEE!
Lastly, do us all a favor and be sure to document the successes of your people. Its not all about discipline for bad behavior. It is also about repeating successes. Throw down a record for closing a high value customer or finding a redundancy that ended up saving the company a good chunk of change.
How can Cobb HR Solutions help?
HR processes take a lot of work to establish. Figuring out where to look, what you need, and how to implement it takes some serious and valuable time away from you that you could spend elsewhere. Auditing your current and future employee classifications, conducting market research on compensation, reorganizing or establishing an organizational construct, streamlining hiring processes, and establishing programs of record for documentation are just among the small number of contributions that could be made to your business.
Click the link below to find our website and more. Let’s connect and I’ll answer as much as I can for you!