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7 top HR mistakes companies make


It’s easy to ignore the human resources side of your business when things are flowing smoothly. After all, there are far more pressing concerns nagging us each day. Relations with employees can be enjoyable and fulfilling or time-consuming and terrifying, depending on the situation.

Being proactive in the area of HR, recognizing and rectifying HR mistakes before they become serious problems, can save you countless headaches and protect your business against costly legal claims.

HR mistake #1: An outdated employee handbook

Every business, no matter how small, should have an up-to-date employee handbook. If you don’t put the most current dos and don’ts in writing, you’re asking for trouble. In addition, laws change, which may significantly alter the applicability of your policies.

Even a few pages outlining acceptable and expected behavior provides employees with tangible guidelines. The employee handbook should be updated about every two years, and all employees should sign an acknowledgment form stating that they received the publication and will abide by its policies.

Include information such as your company’s:

  • code of conduct
  • communications policy
  • nondiscrimination policy
  • compensation and benefits
  • employment and termination guidelines

HR mistake #2: Failing to document performance issues

Written policies and standard operating procedures are the boundaries that govern employee conduct. When a violation occurs, it must be accurately and thoroughly documented. Although it may seem time-consuming to jot down in a file that someone was reprimanded for repeated tardiness, it’s important evidence that can support a decision to terminate that individual for unsatisfactory job performance, for example.

In addition, when a company is consistent in its application of performance issues, it’s better able to address potential legal issues that may arise in the future, such as a discrimination claim.

HR mistake #3: Incomplete employee files

For compliance reasons, it’s very important to keep records of all the personnel documents attached to your employees’ work histories.

It’s also a good practice to make sure the proper documents are kept in the employee performance file. Some documents that contain personal information, such as leave and disability forms, should be kept in a separate folder since these are personal in nature and aren’t needed to manage an employee’s performance.

It’s helpful to have a binder for all valid I-9s, which verify employee identity and work eligibility in the United States. They should be easy to access and updated when necessary. Fines can add up quickly if you can’t produce current and accurate documents upon request by Immigration and Customs Enforcement (ICE).

And because of the Health Insurance Portability and Accountability Act (HIPAA), it may be wise to store your employees’ health and welfare-related benefits information separately as well.

HR mistake #4: Hasty hires and inaccurate job descriptions

Hurried hiring and promotion processes can lead to a host of problems for employers. Before you even consider hiring someone, take time to flesh out exactly why you’re hiring and what skills are necessary in the ideal candidate.

A few hours spent crafting a solid job description can prevent countless hours of future hassle. For example, when you’re recruiting a candidate, they may have impressive skills, but that skill set must also address your needs. A detailed job description helps you stay focused on exactly what you need in a potential candidate.

Likewise, job descriptions are important references when an employee requests a modification to their job for medical reasons.

Say one of your warehouse supervisors, John, is involved in an accident and breaks his leg while on vacation. He recovers and comes back to work, but he is not physically able to do the heavy lifting he could before. Can he continue in the same role? If so, does he need a modification to help him carry out his duties? If he can’t remain in the role, what are your options? In order to determine that, you’ll need to engage in the interactive process. The first step in this process involves reviewing the essential and marginal functions of the job – which should be identified in his job description.

Understanding exactly what is expected of the employee, including what job tasks are essential and which are marginal, can simplify an otherwise cumbersome process when dealing with the Americans with Disabilities Act (ADA). It can also help identify what a company is able to provide employees in a situation like John’s.

HR mistake #5: Disregard for training

Taking time to train your employees is a valuable investment in the future of your business. By including training in the onboarding process, your employees may become more fully engaged and understand how to use their skills to best benefit your company.

Employers who spend time on training also get training’s indirect benefit: employees who feel like they’re valuable and capable of doing more for your organization.

And remember, it’s important that the employee’s performance, including skills and areas of opportunity and growth, are accurately reflected in their performance reviews.

HR mistake #6: Inadequate HR policies

Don’t overlook the importance of an internal HR audit. Set aside time annually to make sure your HR policies are current and complete.

For example, many businesses don’t include a vacation payout policy in their handbooks — or a complaint process or disaster and workplace violence plan for the organization. This creates situations where employees may quit with unused vacation time. If they don’t know ahead of time how that time will be treated, they will likely complain.

Also, sometimes the unthinkable happens and disaster strikes. By providing clear guidelines on how to respond prior to an incident, you can help minimize the impact it might have on your employees and your business.

A well-thought-out plan will help protect you, your employees and your customers.

Consider these questions when developing your plan:

  • Who will be in charge?
  • What are your pre-established responses?
  • Will you shelter in place or evacuate in certain situations?
  • Do you have an off-site meeting place for people to gather?
  • How will you communicate with your employees during a disaster?

Having policies and plans for handling unexpected events reduces the stress, liabilities and costs to your business.

HR mistake #7: Employment compliance ignorance

Managers must be fluent in employment laws and regulations. In addition, they must have access to a resource that can keep them up to date in the changing employment environment.

Misclassifying employees as independent contractors when they’re not, or as exempt from overtime when they shouldn’t be, can be costly oversights. Failure to comply with OSHA (Occupational Safety & Health Administration) regulations for your industry may also yield stiff fines.

Prevention is key. Take time to identify what regulatory agencies govern your industry and what laws must be followed.

Looking for additional HR tips? Get our free e-book

How effective are your HR practices? Download our free e-book, 7 Most Frequent HR Mistakes and How to Avoid Them, to discover additional strategies for correcting these common errors.