Entrepreneurs are driven by their ability to leverage the plethora of skills and expertise they possess into revenue generating activities that evolve into functional business organizations over time. The focus, to achieve success in the entrepreneur’s mind, must be placed on the development and delivery of products and services effectively and efficiently to identified and established clients.
This reality is so true that a large portion of small business owners, the entrepreneurs who make up most businesses in the United States, operate with blinders on in the establishment and development of their infrastructure to support the growth of the business.
There is an absence of any human resource strategic planning or management. The result is significant risk and liability in the execution of their employment practices, which ultimately could mean the difference between long-term business success, and utter failure.
Ten small business practices that create risk and exposure to employment practices liability:
- Failure to hire the appropriate, qualified resources to support the delivery of products and services to clients.
- Lack of recruitment expertise to understand hiring should be based on the needs of the business, and not based on the limited scope of skills of the applicants.
- A missing employee handbook of policies and procedures in the management of the workforce.
- Inappropriate recordkeeping practices in accordance with compliance obligations for the defense of personnel and employment related decisions and actions.
- Lack of accurate and effective job descriptions and organization structure to enable appropriate management of the employees.
- An absence in supervisor or management training in employment laws and regulations that govern the small business activities as they relate to the human capital, i.e. the workforce.
- Limited training for employees in company practices and procedures, and a lack of formalized orientation and onboarding programs to empower new hires to achieve their greatest potential.
- Poor planning for activities such as leave management, workplace safety and security, compensation, and even basic principles such as work schedules and employee communications.
- Failure to establish job performance goals and expectations, and then the lack of performance management which results in declining results and an absence of employee accountability.
- Missing processes and procedures to handle employee complaints, concerns, or the management of responding to or handling these matters to ensure appropriate employee relations.
While these ten practices are not a complete and comprehensive list of all possible small business failures in the establishment of effective human resource management infrastructure, they are certainly evidence enough that if they resonate with you it is time to make changes to your business. I have witnessed far too many entrepreneurs and business owners work in their business narrowly focused on their products and services who fail to work on their business and build the foundation that all future success will depend on.
One single lost law suit could destroy the business you worked so hard to build. The financial devastation and the unwelcome negative publicity will damage your reputation, credibility, and ability to achieve established business goals without tremendous obstacle. For those reading this article who are realizing at this very moment that there are gaps in their infrastructure, understand that the solution and preventative measures you can implement are far less costly than the consequences of operating without an efficient, effective, and compliant human resource management infrastructure.
The short and long term return on investment from establishing this infrastructure is only eclipsed by the benefits of having a proactive risk management program for employment practices to mitigate risk and provide you peace of mind. To mitigate and resolve these ten business practices in your favor, secure the necessary subject matter expert(s) who can guide and direct your small business in building and maintaining an effective human resource management infrastructure, you will be thankful that you did.