When it comes to running a business, it’s a good idea to expect the unexpected. Missed shipments, sick employees, and being thrown for a loop by demanding clients are all par for the course.
But what about the cost of mistakes made by HR?
There are few things that will take the wind out of your sails faster than an employee lawsuit. According to research by Hiscox, the average cost of an employee lawsuit is $160,000, and it can take an average of 318 days to resolve.
So, while every problem might not be avoidable, savvy business owners will always look for ways to mitigate the risk of major issues, especially when they can significantly impact their bottom line.
To help with this, we’ve put together a list of four of the most common HR mistakes.
An employee handbook is critical when it comes to protecting your company from employee litigation. Not only is it the best way to effectively communicate what’s expected of employees and leadership, but it’s also what you’ll fall back on in the event of an employee lawsuit.
Not having an employee handbook can lead to:
An employee handbook is more than a list of rules. It’s an important legal document that will help your company avoid legal liabilities, improve productivity, and contribute to a cohesive company culture.
Get started with our free Employee Handbook Outline Template >
Running a smooth ship is often about squashing small problems before they become bigger ones. There is no area where this is more important than HR-related issues, where minor disputes can turn into significant legal challenges if left unchecked.
Unresolved problems can spill over from one employee to the next, leading to negative work environments and increased turnover. So even if you think the problem will go away when the parties involved are no longer with your company, don’t be surprised to see the issue reappear down the line with different faces.
According to Gallup, the cost of replacing a single employee can be anywhere from one-half to double that employee’s annual salary. An organization with around 100 employees can face up to $2.6 million in turnover costs each year.
Unresolved conflicts can weigh on the minds of employees while they’re at work. This is distracting and stressful and can lead to decreased productivity and efficiency.
As a business owner, your employees look to you for leadership and guidance. If your workplace is rife with minor conflicts that go unacknowledged, you could be seen as an ineffective leader. This will make it more difficult to attract good talent or even business partners and investors.
Uncertainty about the future can have significant consequences for an organization. Without a proper succession plan, a business can suffer from disruptions, loss of talent, and decreased morale.
When key leaders depart suddenly or without a clear successor, vacuums can form in leadership roles. This can paralyze an organization by seizing up decision-making, strategy execution, and even daily operations.
Experienced leaders possess valuable knowledge about the inner workings of your company. Without a succession plan, you risk losing this knowledge, permanently impacting your company’s ability to adapt.
If you lack internal candidates who are ready to step into leadership roles, you’ll have to resort to outside hires. These candidates often lead to increased recruitment expenses due to time lost.
Prepare for the future with our free Succession Planning Pack >
HR regulations exist to protect employees and foster harmonious, ethical work environments. It’s important to stay abreast of any changes in this area, but this can be easier said than done when regulations are constantly shifting.
Failing to stay on top of HR compliance regulations can result in:
These four HR mistakes can all prove extremely costly for a small or medium-sized business.
Yet, being aware of these potential pitfalls is only half the battle. If you’re a business owner who lacks HR expertise, implementing solutions to these problems may be a daunting task.
A BBSI, we know the best defense against mistakes like these, is a great offense.
BBSI is a PEO that has the experience, resources, and knowledge to meet your human resource consulting needs.
Whether you need help crafting an employee handbook, resolving disputes, planning for the future, or just need help ensuring you’re always up to date with HR regulations, BBSI is ready to offer support.
Find your local BBSI Human Resources Consultant today.