Improper HR Can Cost You
Generally speaking, we’ve learned that many small businesses have underestimated the cost of in-house HR managed incorrectly. In addition to the hard costs, there are many hidden costs usually not even noticed by companies that can impact a business negatively.
Below are some of these slowly realized costs that add up over time:
1) Poor hiring practices:
The cost of a bad hire can’t even be quantified in many cases (many speculate that the costs can surpass the compensation level of the position in the first place). Improper or incomplete hiring practices can result in your company hiring an employee who lacks the proper job skills, has substance abuse issues, a criminal record, or is a poor fit for the culture of your organization.
Not to mention, if proper hiring practices weren’t followed, there’s the cost of litigation and unemployment claims.
2) Inadequate employee disciplinary action or termination:
Improper and incomplete documentation of poor performance can increase the likelihood of your company losing a claim if a disgruntled employee takes you to court. Following the appropriate channels and actions if you must fire an employee is essential to the financial well-being of any business.
Did you know that employees win work-related lawsuits two-thirds of the time, according to many reputable sources? That’s sobering. Proper compliance with the ever-changing and highly structured HR laws and regulations is crucial to avoiding the costs of employee-related litigation.
Processing payroll, administering employee health and welfare beneﬁts, and managing other key HR systems and functions often requires robust automated systems. Ideally, these systems should operate together and be centralized, however, in many small businesses, these functions operate in silos that drive up administration costs and employee time. Using a single vendor and/or an integrated system to manage multiple functions is key to realizing cost efficiencies.
The true costs of improperly handling HR also include money lost to losing ground to the competition, inhibited growth potential, and the inability to attract better and more productive talent.
Where might you need to fill the gaps in your HR processes?