Top three HR mistakes for SMEs to avoid

Reduce employee turnover and ensure your business runs smoothly by following these helpful advice on recruitment

  
Image used for illustrative purpose. A visitor attends an opening ceremony of World SME Expo for small and medium enterprises in Hong Kong November 16, 2004. The largest SME-focused promotional event since mainland China adopted a new policy to encourage enterprises to invest in Hong Kong. More than 300 trade support service providers and industry associations from around the world offer a wide range of SME-focused services at the expo. ECONM REUTERS/Bobby Yip

Image used for illustrative purpose. A visitor attends an opening ceremony of World SME Expo for small and medium enterprises in Hong Kong November 16, 2004. The largest SME-focused promotional event since mainland China adopted a new policy to encourage enterprises to invest in Hong Kong. More than 300 trade support service providers and industry associations from around the world offer a wide range of SME-focused services at the expo. ECONM REUTERS/Bobby Yip

One of the most important things you'll have to monitor as an entrepreneur is human resources. Whether you've just founded your start-up or you're looking to expand your territory, you'll want to make sure that your employees are monitored closely and treated well – from the moment they step into the office as potential hires to their last day.

Lack of diligence in this arena can result in costly consequences, such as the possibility of litigation as well as a high turnover rate.

  • An unclear and unfocused hiring process

The mistake

It's easy to think about the kind of staff you want to hire. Ideally, you'll want intelligent and hard-working employees who are willing to go the extra mile when it's needed of them. The problem is that attracting that kind of employee is more difficult than putting said traits onto an advertisement. Figuring out how to focus and clarify the hiring process is of utmost importance on more than the human resources level – hiring, training and eventually having to let go of a bad hire can get expensive.

The solution

Don't be in a hurry to fill the ranks. Like most things that require precision and diligence, it will take time. The extra time you spend making sure everything is in order will save you money in the long run.

First, make sure the job description is accurate and helpful. You're not just looking to fill the seats with warm bodies – you want to make sure you get the right people. Be sure it details job requirements as well as any bonus qualifications. It should also list what responsibilities the hire should expect to fulfil, as well as give them some idea of what company they're applying to.

You should also participate in the actual interviews. You'll want to meet the prospects for yourself and find out whether they're a good fit for the company culture. Have a number of people included in the interview process to get a holistic view of who you're potentially hiring.

  • Not updating the employee handbook or not having one at all

The mistake

That which is not explicitly forbidden will often be done. Employee rulebooks exist to inform your hires of what is considered acceptable behaviour and what isn't. If you want to be a successful entrepreneur, your company must have one. If your company already has one, but it is not constantly updated, it may as well not exist at all. Without a company rulebook, you will have trouble maintaining control and reprimanding your employees for transgressions and abuses.

The solution

Start by having a company rulebook to begin with. Get your partners and managers to take a look at it to make sure you didn't miss anything. Every six months, take a look at the handbook and see whether or not you can update it. If you're having trouble figuring out whether or not it needs a touch-up, think about the complaints your company has received, externally and internally.

Employees should also be required to read the rulebook and sign an acknowledgement that they actually read and understood it. This will allow you to impose penalties or terminations as the situation demands, while making sure your company is legally covered.

  • Failing to document performance issues

The mistake

At some point, you're going to have to terminate someone. It's just part of being an entrepreneur and being a boss. The problem is when you don't have the proper documentation to back up the decision. This can result in unwanted and messy lawsuits that can at best, slow down your company's growth and at worst, shut it down entirely.

The solution

You can prevent performance issues from leading to terminations by handling them as soon as you hear about them. Collect and archive all documentation related to the issue, and then make sure the manager in charge of that employee addresses those problems.

Only when the employee continues to underperform or exhibit behavioural problems despite feedback should termination be considered. Show the employee the numbers and the reports related to his or her transgressions. Make sure that they understand that it is a matter of performance and behaviour, and not because someone dislikes them.

Your start-up and product aren't the only things you're supposed to mind as an entrepreneur. Your employees are the lifeblood of the company. Take care of them, and they'll take care of you.

Note: This article was originally published on Accelerate SME and it has been republished on Zawya with full copyright permission.

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