7 Costly HR Mistakes

Updated: Apr 4



When you started your business, you probably never imagined managing an employee’s wardrobe or virtual background for team meetings. Or whether it was necessary to create rules around sick time in a virtual workplace. But growing your company means bringing on new team members. And with those new team members comes unpredictable new challenges.


At HR TailorMade, there’s not a lot of scenarios we haven’t seen with employees. Yes, there are crazy outliers but most issues stem from avoidable mistakes in your HR policies and procedures.


Below you’ll discover a list of 7 of the most avoidable but common mistakes we come across with clients.


Mistake #1: Not Acting Quickly On Employee Issues

Owning a small business involves a million and one tasks to keep it running smoothly. So when it comes to employee complaints, it’s easy to dismiss or overlook those that don’t seem serious.


The problem with this practice is, the success of your business is reliant on the harmony and engagement of your team members. In fact, employee engagement directly affects your bottom line. When there is a problem brewing, you may start to notice more tension, underperforming projects, and increased employee absenteeism.


When you have an issue on your team, immediately address your concerns with your team or the team member, and give them the resources they need to solve the issue or make improvements. If it continues to happen, be sure to start your progressive discipline or performance improvement process.


Mistake #2: Misclassifying Employees

Misclassifying employees happens when a position is incorrectly labeled as exempt vs non-exempt. Remember, exempt employees are not entitled to overtime payments and non-exempt employees are. In my experience, this significant error is one of the most costly mistakes that small organizations make. Not only is it frustrating to correct, it will cost you a significant amount of money to do so if fined.


Working with dedicated HR professionals and employment law experts can help you avoid this costly mistake.


Mistake #3: Not Having an Employee Handbook

Creating employee handbooks is one of our favorite activities. Not only do we enjoy creating them, we also know they are the foundation of the amazing culture that entrepreneurs and founders are hoping to create. Though you’ve likely read a ton through various jobs, you’d be surprised by the number of small businesses that skip handbook creation altogether.


Whether it’s because you’re too busy, or you have a small team, business owners cannot afford to overlook this crucial step. Because many states require that specific procedures for sexual harassment and annual training be clearly outlined and adhered to, handbooks serve as the most effective way of delivering this information. Read 7 Compliance Trends to Retain Talent to learn more.


Handbooks require legal and employment expertise you may not have experience with. If that’s the case, contact us for a free HR strategy session and we’ll get you started on the right path.


Mistake #4: Hiring on a Gut Feeling

Hiring is hard. You may have to go through the interview process many times before you find the right candidate. And if you’re doing it alone, you don’t always have the time to vet the right person. For that reason, many business owners hire solely based on a feeling they get from a candidate. The problem with this strategy is that you hire people you like but who may be unable to perform their duties.

Hiring shouldn’t be a decision you make on your own. Hiring should be taken as seriously as finding a nanny for your child or a housekeeper for your home. With that in mind, create your plan, understand what you are looking for, and dig deep to find the person that answers your questions and demonstrates the knowledge you need to move your team and organization forward. Download the HR Hiring Checklist for an expert view of what you absolutely need before bringing on a new team member.


Here’s a sample of what you’ll learn:


  • How leadership plays a role in hiring

  • Defining your reasons for hiring/growing your team

  • Legal and financial steps to take before bringing on a new team member


Mistake #5: Falling Behind on Laws and Regulations

As mentioned before, local, state, and federal governments are constantly changing and new ones are established every day. Unless you are tapped into a system that sends you updates or has a dedicated legal team, it’s very easy to fall behind. Not to mention the fact that you might not understand how new laws impact you or what you might need to do differently as a result of the new law.


The legal ramifications of non-compliance with employment laws and practices can land you with hefty fines or high employee turnover. Tools like cloud-based HR software help you stay updated on law changes in your area and tips to remain compliant.


We help our clients remain compliant by interpreting the laws and updating their policies for them. HR TailorMade provides a turnkey system so business owners like you can spend their nights with their families instead of researching policy.


Mistake #6: Not Communicating

Employees need regular ongoing feedback. It’s easy to get lost in our work and overlook the fact that we are leading people who need to hear from us. Without regular and meaningful communication, our team can’t deliver according to expectations, especially those that are unsaid.


Communication should be something we do weekly in the form of check-in, at a minimum. During these check-in meetings, you and your team members should discuss expectations, priorities, successes, and challenges.


Failing to communicate can result in poor performance, costly errors, turnover, low employee engagement, and poor morale.


Mistake #7: Being Too Busy to Be Human

Last and most importantly, as you build your company, don’t forget that you are also building people. You can’t scale without the right team and good employees need to be recognized. Take the time to give feedback on work and if someone is doing a great job, let them know it. Implementing a formal reward system can also help employees feel recognized as they grow.


Showing appreciation is a small-time investment but pays dividends in retained talent and thriving work culture.


What HR Mistakes Really Cost

These HR Mistakes all have the same cost in the end: your time, your sleep, and your money. At some point, you’ll have to invest one or all three to correct easily avoidable behaviors. However, running a company on your own is difficult. You have limited time and resources. As a result, you make ‘good enough’ HR decisions. Well, with HR Tailormade, you don’t have to settle for "good enough".


We’re your phone-a-friend HR department that handles everything from creating policy and procedures to hiring new talent. We help businesses with 0-50 employees cultivate the work environment your company needs to thrive and retain your best talent. Contact us today to learn how we can help you.