While there are fewer employees to contend with in a small business, people management is just as important as in larger businesses. Since small businesses may have smaller HR departments or may not have any HR department at all, the responsibility of managing the people often falls on a manager or entrepreneur whose expertise is in a different area. As a result, a few management mistakes commonly occur.

Hiring Too Fast

When a position opens up in a small business, it leaves a large void. It is often necessary to fill the position quickly in order to keep the business running smoothly. Unfortunately, many hiring managers in small companies cave in from the pressure and hire someone that may be less qualified just to fill the position.

Not Allocating Enough Resources toward Training

Training takes time and money; there is no avoiding it. Many small businesses make the grave error of failing to properly train employees. A failure to properly train can cause a company to lose customers, make an employee feel unprepared and bitter towards the company, and cost the company money.

Failing to Document Performance Issues

Performance and behavioral issues are a problem for any company. Failure to document performance issues can give employees silent approval for unacceptable behaviors, which can lead to further behavioral issues and foster discontent among faithful employees that achieve the standards. If an employee is fired for performance or behavioral issues and no documentation is made concerning the issues, the employee may also be able to collect unemployment or sue for wrongful termination.

Not Firing In a Way That Benefits the Company

Many small business owners and managers fire employees according to personal relationships, tenure, and other reasons that have nothing to do with company performance and the bottom line. If it is necessary to fire someone because the business cannot afford to keep all of the employees in position, it is important to review performance factors and make a logical decision. If an employee needs to be fired because of performance or behavior, it is important to put personal feelings aside and focus on meeting the needs of the business first.

Failing to Comply with Employment Laws

Certain employment laws apply to businesses with just one employee, while other laws apply to businesses with 12 or more. Others apply to businesses with more than 50 employees. It is critical for employers to study these requirements and take the necessary steps to comply with all applicable laws.

Small business owners must be aware of human resource laws regarding:

  • Discrimination
  • Family leave
  • Military leave
  • Minimum wage requirements
  • Overtime
  • Safety standards
  • Disability

Misclassifying Employees

Some small businesses classify employees as contractors to save on taxes, but this can be a critical error if employees do not fit the legal description of contractors. Different laws may also apply if an employee is classified as part-time instead of full-time. Small business owners must be careful to classify employees properly so that they do not incur penalties.

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