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7 Common HR Mistakes small businesses need to avoid making

February 15, 2016

Running a successful small business is a balancing act, which requires business owners to be in five different places all at once, whilst also mastering the art of embodying multiple roles in order to service all aspects of their business.

Whilst, unfortunately this is just a fact of life for many small business owners, the increasing demand placed on them can increase the chances of mistakes being made, which can have detrimental effects on the business from the possibility of litigation to increased employee turnover.

Here are 7 of the most common HR mistakes small business owners often make, but can easily be avoided;

1. Failing to provide a written contract of employment

A contract of employment is the cornerstone of every employment relationship; it contains the main terms and conditions of the employee’s employment, but also contains your company’s rules and procedures.

Failing to provide the written contract is not only a breach of a statutory requirement (an employee can be awarded up to 4 weeks’ pay if they do not get one), but it also puts you in a tough legal predicament is something were to go wrong.

If an employee is not made aware of what behaviour is deemed unacceptable, then your ability to discipline them is severely affected.

2. Not sticking to your own rules

A good set of disciplinary rules and procedures will include examples of unacceptable behaviour together with the potential consequences of that behaviour.

For example, an employment contract may state that an employee will be subject to disciplinary action when they have turned up late for work 3 times in a month.

Simply having written rules is not enough – you must actually enforce them so that employees can see that you are serious about them. If you say you will implement disciplinary procedure at a certain point and then don’t, employees will think that they can do what they like and never be questioned regarding their poor conduct.

3. Failing to follow procedure

There is nothing more important in employment law than ‘procedure’. Dealing with sensitive issues and legal situations requires employers to follow certain rules and procedures. Failure to carry out the correct procedures can land you in legal hot water.

Employers often mistakenly believe that certain situations are so cut and dry that no procedure is needed e.g. a gross misconduct offence such as violence in the workplace, where the behaviour is so unacceptable that an employee can be dismissed on the spot and told never to return.

Even in these cases, an employer is still expected to carry out a procedure to ensure a fair dismissal and to remove any risk of having to pay compensation to the employee.

RELATED: How to handle disciplinary issues in the workplace

4. Not managing sickness absences

It will never be possible to eliminate sickness absence entirely. However, this does not mean that you should not address it; clear policies and procedures can help you keep on top of it.

A good starting point is having rules regarding the notification of absence and making sure employees know about them. This should be followed up by detailed sickness absence records.

Record the absence in a “user friendly” format so that you are able to “see” any absence patterns easily – look for recurring days, dates and reasons for the absence. These records will also help you to easily detect when the individual’s absence has reached a point that now needs to be examined.

Speaking to the employee about their absence as soon as they come back, again keeping records of the discussion, will show them that you monitor and analyse all absences, and will challenge any inconsistencies.

Clear contractual terms relating to absence, pay whilst absent and formal action to be taken (including when termination may be considered) are necessary and must be followed. These can differ depending on whether the absence is a capability issue or due to the conduct of the employee.

RELATED: Managing staff sickness absence – A Guide for small businesses

5. Not having an audit trail

Employers may think that, because they have a small team where everyone gets on well with each other, there is no need to formalise anything; decisions are made during a coffee break and no notes are kept.

Problems arise from this when an employee thinks that they have been wronged and employers have no evidence to show that they have had a conversation with the employee, or that the employee agreed to certain things in the past.

Keeping contemporaneous notes of all meetings and always confirming any decisions or changes in writing with the employee involved gives the employer an audit trail to be able to rely on should anything be queried later.

6. Not dealing with bullying

Idle gossip or workplace banter may appear to some as an innocent act, but to others these actions and behaviours can be viewed as bullying or harassment.

Employers should not pass this off as the employee being ‘too sensitive’. If left unaddressed, what could have been handled in 5 minutes becomes a large discrimination claim where tribunal compensation is unlimited.

Employers should remain vigilant of their employees’ behaviour, constantly monitoring them to ensure correct protocols are followed. Any instance of bullying or harassment, no matter how small it may seem, must be dealt with the upmost importance. For more on this, read; A guide to dealing with workplace bullying

7. Ignoring the importance of training

Investing in your business means investing in your employees. You have hired key talent to help innovate and drive your business forward, so don’t neglect the importance of ensuring you employees are up-to-date with industry standards.

With the ever changing nature of business including how technology and social media are impacting the way businesses connect with their stakeholders, training and development has never been more vital.

Encouraging the development of your employees can also improve employee engagement. From an employee’s perspective, work is more than a job, it’s an opportunity for them to shine and demonstrate their skills.

Employees want to feel like they are a valued member of the business, and as such, want to actively contribute and grow in line with the company.

With this in mind, employees should be provided with the tools they need to succeed from the onset of their employment, whilst ensuring that they have opportunities to develop throughout. Not only will this keep employees performing at their optimum capacity, but it will also help maintain staff morale.

About the author

This guide has been written exclusively for ByteStart by Peter Done, Managing Director of Peninsula Business Services – the UK’s leading specialist Employment Law, HR and Health & Safety service. Other employment guides Peter has written for ByteStart include;

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