Top 10 HR Mistakes Small Business Owners Make & How You Can Avoid Making Them

Oh hey, small business owners.

We know there’s so much on your plate that it’s easy to let Human Resources slip through the cracks. But we also know that good HR practices are one of the most vital things you do daily for your company.

They’re also one of the most important things to make sure you’re getting right.

Putting your people first is one of the fastest ways to see your business thrive. You know this. But you’re not always clear on where you’re making HR mistakes and where you’ve got it covered.

We’ve got you!

The 10 common HR mistakes we see & how you can do better:

1. Using salaried and hourly incorrectly.

Employers are often tempted to designate a position as salaried simply because it meets the salary threshold of $684 a week. But that’s not enough to ensure you’re in compliance.

We know that avoiding overtime pay is tempting. But it’s not as easy as slapping a salary label on a position just because of the pay rate.

A quick reminder that minimum wage and overtime is regulated by the Fair Labor Standards Act (FLSA). There’s no messing around here, or soon you’ll have a claim on your doorstep.

So what can you do to avoid this common mistake small business owners make?

Ensure that the position (not the person) passes the duties test as well as the weekly salary threshold of $684.

To be exempt, the job position must also meet one of the categories of the duties test. These include Executive, Professional, Administrative, Outside Sales, and Computer.

You can find the test for all five through the DOL here.

If the position falls under one of these categories, meets all stipulations of the test, and meets the weekly salary threshold then you’re covered. If not, you cannot put that position on salary and you’ve gotta pay overtime when necessary.

2. Missing the mark in onboarding.

Think of hiring like you would try to convince the love of your life to date you.

Okay, hear us out.

Employers often rush the new hire training period. In doing so, they fail to provide structure, support, opportunities for feedback, and immersion into the company culture.

Missing the mark on this can substantially decrease the likelihood of that amazing love-of-your-life employee, staying on board.

When it comes to any great new hire you must set a strong foundation for that relationship just as you would in the dating pool.

In today’s post-pandemic workplace culture, employee retention is harder than ever. What employees are prioritizing has changed. They’ve got options, and you want to remain as their top pick.

Make sure you’ve got a top-notch employee onboarding strategy in place so that your new hire is supported throughout the process. Your employee retention rate will thank you.

3. Mixed messages.

When it comes down to it, you are not doing anyone any favors by glossing over what you actually expect from them. It hurts your people, and it hurts your business.

It can feel easier to not have the hard conversations and to not set clear expectations. But effective communication is everything in leadership.

Brene Brown Ph.D., professor, and author is known for her research on leadership. In Dare to Lead, Brown reminds us –

• “Feeding people half-truths or bullshit to make them feel better (which is almost always about making ourselves feel more comfortable) is unkind.

• Not getting clear with a colleague about your expectations because it feels too hard, yet holding them accountable or blaming them for not delivering is unkind.

• Talking about people rather than to them is unkind.”

In other words, Brown’s research shows us, “clear is kind, unclear is unkind.” As a leader, it’s your responsibility to hold yourself accountable for being kind. To rise above the comfortable pattern of not getting clear with your people.

Prioritize clarity and communication and watch your people excel.

4. Waiting to address toxic performance.

The fastest way to lose a good employee is to let them watch you tolerate a bad one. Yep, we said it. It’s as simple as that. Yet so many small business owners are doing it.

You diminish a great employee's value when you put up with (or even indulge) poor performance and behavior from others. We talked above about employee retention and this is one of the fastest ways to lose it.

When an employee exhibits bad behavior towards management or towards other employees, it is vital to address it immediately. Take note from #3 and open up clear communication to address toxic performance.

5. Reacting instead of responding or failing to respond.

We’ve talked before about how strategic HR makes you a better leader. This strategic approach certainly applies to reactivity.

If there’s an employee issue that you need time to look into, send someone home. Give yourself time to investigate, validate the issue, invalidate the issue, etc.

Our first impulse is often to react. To get defensive or attempt to make an issue go away. But properly responding to issues as they arise is what sets great businesses apart.

Look ahead and take a proactive, over a reactive, approach to human resources. Be strategic. Follow through on implementing new strategies and practices and become a people expert.

Give yourself the time and space when necessary to respond.

6. Making assumptions and trying to explain employee behavior.

We try to understand why people do certain things that we view as undesirable, rather than remembering that we employ adults and can hold them to realistic and fair expectations.

Sit down with your employee and hold them to these expectations by employing our favorite 3-step structure.

When speaking with an employee about behavior that needs to be corrected, ask:

• What will you do?

• How will I know?

• When will you do it by?

7. Avoiding structure.

No, a lack of structure in the workplace is not benefitting anyone.

The idea of “common sense” is an excuse we see employers use when trying to explain or understand performance issues. But blame cannot be placed solely on your workers.

Oftentimes businesses start off small and no structure is implemented at the beginning. Then systems aren’t put in place as they grow.

Next thing you know, you’ve got multiple employees and can’t understand why not everyone is meeting expectations.

Your employees need structure in the form of SOPs, policies, training, etc. And when this structure is put in place it needs to be continually reinforced.

8. Focusing on heuristics instead of performance.

A common mistake small business owners make is how they look at an issue. Oftentimes, they focus on the non-performance-related characteristics of the issue.

A common example of this is deciding that an employee has an “attitude issue.” Instead of saying that someone has an attitude issue, focus on what performance is exhibited that gives that impression.

When you’ve narrowed that down, next ask how you can speak to, and evoke change, in that person’s performance. Rather than attributing the issue to a flaw in character.

In other words, avoid making snap judgments or reaching conclusions without the full picture.

9. Letting employees create the culture.

Allowing your employees to set and determine the culture is one of the biggest HR mistakes small business owners make.

Your company culture is the way that your employees act, think, and interact. As a leader, employees look to you to set the tone and culture.

For example, if you speak rudely to your staff, that is the culture you create. Likewise, if you allow an employee to speak rudely to a customer, and you don’t address it, that’s the culture you’re creating.

Everything you do as a leader, owner, or manager sends a message. Be intentional in the message you want to send and let that intentional action set your company culture.

10. Saying thank you, but generally.

This one goes ties in with your company culture. How you treat your employees, including how you thank them for good work, is up to you. But recognition can go a long way in employee satisfaction and retention.

Great Place to Work reminds us that recognition, “helps employees build a sense of security in their value to the company, motivating them to continue great work.”

When your employees can clearly see that you value their contributions you organically elevate your workplace culture. Without any form of recognition, employee satisfaction suffers.

Thank you notes or appreciating a specific thing that someone has done are highly underrated forms of recognition. Small actions taken daily can make all the difference.

Keep an eye out for any of the 10 common pitfalls above and take intentional action to remedy them. Remember, strong HR practices are some of the best ways to guarantee employee satisfaction and success. After all, strong company culture and visible leadership can make or break how your workplace functions.

Get to it.

Looking for more direct HR support? Schedule a free consultation with us to learn how expert HR consulting can help you and your business thrive.