5 HR Pitfalls That Will Cost Your Company Money

A picture of a man looking at a laptop looking distressedA company’s human resources department is its first defense when things go awry internally. The HR department works to smooth over employee discrepancies, internal complaints, and represents the company to employees. It takes a lot of moving parts, and if one thing gets out of tune the whole department can spiral into disarray. Here are some costly pitfalls to look for and avoid.


#1 – Keeping Incorrect or Incomplete Employee Files

It is essential that all employee files, including I-9s, identifying documents, exempt/non-exempt status forms, and all other essential papers are accounted for and stored properly. Neglecting employee files will make it significantly harder to act if an issue arises, to correct mistakes, or to verify information for other purposes. This will also leave your business open to litigation from both employees and the government. Regardless of whether your files are stored electronically or in a cabinet, make sure the proper documentation is easily accessible to the HR department and is stored securely.


#2 – Not Having a Culture of Compliance

A culture of compliance means that your business strives to follow all government regulations and has systems in check to ensure that all regulations are being met. Having a culture of compliance not only helps the business remain in line with government regulation, but also helps the company in case of an audit. If you have clear systems in place to make sure everything is on the up-and-up, auditors will be a bit more lenient if any mistakes arise. Not having this safety net leaves you wide open to heavier fines.


#3 – Disregarding Confidentiality and Employee Safety

HR is in a tricky spot since it requires both handling employee complaints and safeguarding the business. However, there needs to be a balance between these two responsibilities. You should never compromise employee confidentiality in the pursuit of safeguarding a company. The employee’s information is your responsibility, and if information that needs to stay private does not, that breach in trust will be difficult to mend. On the same note, employee complaints need to be considered with the proper action. Neglecting their concerns can lead to unsafe work environments on either a material or interpersonal level. Ensure that you and your team are trained in such matters and can handle them with the tact they demand.


#4 – Having an Undertrained Staff

Similarly, your staff must receive sufficient training for their position level. Having undertrained or untrained HR staff is a massive financial liability. If one of these undertrained staff members makes a costly mistake or one that would result in firing, the financial responsibilities fall on the business. These include severance pay, but also the cost of recruitment, onboarding, and training a new person. Or if the transgression is egregious enough, legal fees or time spent fighting a lawsuit will add to the cost. Your HR department is not where you want to skimp on training. And keep in mind that just because a professional has a degree, that doesn’t mean they can perform the job without any training.


#5 – Neglecting the Onboarding Process and Employee Growth

Looking at a company-wide perspective, it is never smart to undertrain anyone hired onto your staff. However, the best way to avoid that is to have a thorough and effective onboarding process. This can include things like designated training hours, employee handbooks, and one-on-one time with management. On the same token, implementing a growth model for employees, such as raise requirements and promotion timeframes will improve employee retention, avoiding the costs associated with turnover.


The work of the HR department can be difficult at times, but the importance of avoiding missteps cannot be overstated. Keeping mistakes to a minimum will not only strengthen the department, but also save the business a lot of money. And if you have good HR professionals on your team, your employees should be satisfied as well.


Are you looking to strengthen your HR department? Area Temps interviews professionals from across Northeast Ohio across every level of human resources. If you’re interested in hearing more about our services and candidates, contact us here or call your closest Area Temps office.

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