Workforce expenditure frequently represents the most substantial operating cost for a company. Consequently, errors concerning human resources can significantly impinge upon the firm’s profitability and staff morale.
The function of Human Resources (HR) holds a pivotal role within any business structure. This department is responsible for enhancing employee morale, ensuring safety, providing continued training, facilitating remote work, and ensuring compliance with both state and federal regulations. Consequently, the scope and importance of HR have expanded, resulting in increased demand for HR professionals. As per the U.S. Bureau of Labor Statistics, the job market for human resources managers is projected to witness a 6% growth between 2019 and 2029.
Implications of HR Blunders: A Deep-Dive into the Financial Consequences
HR missteps can wield far-reaching impact on numerous aspects of an organization. The risk of substantial litigation expenses looms large over companies failing to comply with federal and state labor regulations, or neglecting data privacy and security. Moreover, hiring an ill-suited employee introduces potential risks to the organization, further aggravated by significant recruitment and training expenditures.
Particularly for small and medium-sized businesses, defense and settlement charges can average a staggering sum of hundreds of thousands of dollars and almost a year to settle. An examination of 1,214 closed claims from firms with less than 500 employees revealed that 24% of employment charges culminated in defense and settlement expenses amounting to an average of $160,000, taking a lengthy 318 days to resolve.
In parallel, the average cost for onboarding each new employee approximates $4,129. Instituting effective policies and procedures, supplemented with clear communication about expectations and legal requirements, can help retain the right talent. This, in turn, ensures they contribute constructively to fostering a robust company culture in the long run.
Deciphering the 11 Most Common HR Blunders Businesses Encounter
Due to the evolving nature of regulatory conditions, business imperatives, and the corporate environment, the processes within HR can be multifaceted and often complex. As a result, they can pose potential risks to a company’s revenue. Here are some prevalent mistakes:
- Absence of Formal Policies and Procedures: The foundation of numerous costly HR errors lies in the inadequate delineation of expectations and guidance on how to navigate both typical and unusual workplace scenarios. Although policies don’t need to cover every possible circumstance, they should provide guidance on acceptable and unacceptable behaviors. These should encompass potential areas of confusion such as personal cell phone usage, code of conduct, dress code, and more, in addition to legal necessities, governmental laws and regulations, and ensure consistent and fair treatment.
- Failure to Record, Display, and Update Policies: While the creation of a physical employee handbook isn’t mandatory as per the Department of Labor, businesses are required to exhibit posters detailing key areas of regulatory compliance. However, it’s in a company’s best interest to document its policies and procedures in an employee handbook.
- Inefficient Onboarding Processes: Companies invest substantial time and resources in recruitment. Yet, they often lack efficient onboarding strategies to familiarize new hires with the company’s culture and policies, provide necessary equipment, and enable access to self-service tools for benefits enrollment.
- Inadequate Retention Planning: Securing top talent is vital, but retaining them is even more crucial, as losing a high-performing employee can cost an average of $29,600. Creating tailored experiences that align with employees’ motivations is essential for retention.
- Erroneous Hiring Decisions: Hiring the wrong individuals can cost companies an average of $14,900, as per CareerBuilder. Bad hires adversely affect productivity, squander recruiting resources, and compromise work quality. To minimize this, ensure a thorough interview process and always verify references.
- Inaccurate Job Descriptions: Miscommunications and misalignments during the hiring process often lead to employee turnover. Ensure all involved parties review and agree upon the role and its requirements before publishing the job posting.
- Failure to Document Performance Issues: Documenting performance issues assists employees in enhancing their skills and serves as critical evidence in potential litigations.
- Incomplete or Absent Employee Records: Retaliation claims are the most frequently filed with the Equal Employment Opportunity Commission (EEOC). To refute such claims, businesses need to maintain comprehensive records of performance plans, disciplinary actions, and policy violations.
- Regulatory Non-Compliance and Potential Litigation: Staying abreast of evolving laws and regulations, particularly at the state level, is crucial to avoid legal actions. In case of any accusation, prompt investigation and interviewing relevant parties is necessary.
- Insufficient Training: Training provides employees with avenues for career advancement and helps companies retain their top performers. Furthermore, it equips employees with the knowledge to navigate new regulations and workplace expectations, preventing behaviors that could lead to litigation.
- Insecure Data: Especially for midsize companies, data breaches and theft pose considerable risks, extending beyond immediate costs to potential damage to brand reputation. Regular training on data security best practices and strict password regulations can mitigate the chances of a successful data attack.
Capitalizing on NetSuite SuitePeople: Enhancing HR Functionality
While interactions between employees and the HR department may not be a frequent occurrence during an individual’s tenure with a company, when they do occur, the matters are often urgent and critical. Ensuring a smooth, straightforward process that promptly addresses employees’ needs is a crucial aspect of enhancing the employee experience. This, in turn, cultivates engagement and loyalty, effectively reducing attrition rates and associated costs of recruitment, onboarding, and training.
NetSuite’s HR software, SuitePeople, centralizes employee information to automate and streamline HR processes. It alleviates the risk of revenue loss, simplifies compliance reporting, and boosts employee satisfaction across all levels—from the employee to the manager to the HR professional utilizing the software. SuitePeople efficiently manages employee data, hiring, onboarding, performance management, payroll, promotions, and compensation alterations, offering self-service access to all necessary information for employees.
SuitePeople’s performance management features provide a unified platform for recording performance reviews, information traditionally maintained in Excel or Word documents. This allows employees to set, monitor, and assess their goals in conjunction with their managers, facilitating prompt recognition of achievements and proactive discussions to address potential issues. Operational data from NetSuite automatically updates the goals, resulting in accurate performance results with minimal manual effort, thereby fostering greater employee engagement and goal attainment.
Having all employee-related data centralized, HR professionals can track hiring and termination trends, and manage the entire employee lifecycle from a personalized, single dashboard. In addition, access controls ensure that individuals only access pertinent information. This automation of many administrative tasks frees up HR resources to focus on developing relevant trainings in safety, diversity, inclusion, and cybersecurity, while creating pathways for career advancement and leadership opportunities.
In this modern era, HR leaders have rightfully claimed their place at the boardroom table. They not only comprehend the organization’s strategy but also actively contribute to it. They understand the implications of new initiatives on revenue and partake in related discussions. Ensuring revenue safety through solid policies, procedures, and communication is paramount, guiding employees seamlessly from comprehension to compliance to engagement.