Top HR Mistakes to Avoid for a Small or Mid-Size Business

Learn About the Top HR Mistakes to Avoid for a Small or Mid-Size Business


  • Managing HR tasks can be challenging, especially for small and mid-sized businesses with small internal teams.
  • Common HR mistakes to avoid include poor onboarding for new hires, lack of formal workplace policies, and non-compliance with labor laws.
  • At Resource Management, we offer expert HR outsourcing solutions to streamline your tasks, freeing you to focus on scaling your business. Learn how we can help!

Human Resources (HR) is an integral element of business operations and has a direct impact on the long-term success of a company. Yet, managing HR tasks like policy creation, compliance, payroll, and performance reviews can feel overwhelming, especially for small and mid-sized businesses (SMBs) with smaller HR departments.

When poor HR decisions are made, it can create a host of issues and compliance concerns, putting your business at unnecessary risk. This article gives you an overview of the most common HR mistakes to avoid if you want to cultivate a happy, engaged, and productive workforce.

Let’s get started!

The Lack of Onboarding and Proper Training for New Hires is a Major HR Mistake to Avoid

Rushing the Hiring Process

When you’re desperate to fill a vacant position, it’s a natural reaction to approach the process hastily and try to rush things along. However, this can quickly open a can of worms and harm your company in the long run.

Whether it’s not having a clear idea of the skills you’re looking for in an employee, failing to dive deeper into applicants’ credentials, or not interviewing enough candidates, rushing the hiring process can hurt your productivity and profitability.

According to the U.S. Department of Labor, a bad hire can cost your business 30% of the employee’s first-year earnings.

Besides that, making the wrong hire can be toxic to your company culture if employee morale and customer relations take a blow.

Skimping on New Hire Orientation

Regardless of a new hire’s existing experience and talent level, they’re likely to need some orientation to get started on the right foot. Otherwise, the lack of a proper onboarding process and initial training puts new employees at a disadvantage that not only hinders their progress but can hurt your company’s bottom line.

By properly preparing new hires and equipping them with the tools needed to perform their jobs at a high level, you’re placing them in a position to succeed, which is mutually beneficial for everyone. You can also increase your retention rate and improve the likelihood that employees will stick around for the long haul. 

Research suggests that 69% of employees with a great onboarding experience say they are likely to stay with a company for at least three years

Human Capital Institute

Lack of Formal Workplace Policies and Procedures

Small businesses, faced with numerous HR responsibilities and tight budgets, often lack formal workplace policies and procedures. This can have a host of negative consequences and cause many problems:

  • Confusion and inconsistency: Without clear guidelines, employees might be unsure about what’s expected of them. This can lead to misunderstandings, frustration, and inconsistent management. Imagine an unclear vacation policy causing resentment between colleagues who interpret it differently.
  • Breeding ground for problems: Informal approaches often lack clear processes for addressing harassment, discrimination, or performance concerns. This can make it difficult to handle these situations effectively and could potentially scale minor issues into major problems.
  • Legal vulnerability: The absence of documented policies leaves your business exposed. Labor laws can be complex, and without clear policies outlining things like overtime pay, breaks, or termination procedures, you risk violating regulations and facing hefty fines or even lawsuits.

If your workplace policies are insufficient, it’s smart to clarify any ambiguous areas ensuring there’s no confusion. Here are some specific elements to touch on:

  • An at-will employment statement
  • Employee responsibilities
  • Employee conduct
  • What constitutes harassment
  • How performance and behavioral issues will be handled
  • Safety protocols
  • Grounds for termination

Neglecting Performance Management

Performance management is more than just annual reviews — it’s an ongoing process of setting clear goals, providing regular feedback to your employees, and ensuring they are rewarded for their contributions to your company.

Without clear performance expectations, employees might lack direction and motivation. Skipping regular feedback loops leaves them unsure of their strengths and areas for improvement and can lead to missed opportunities for growth. The result? A stagnant workforce that fails to reach its full potential.

Fortunately, there are effective strategies you can implement to avoid this:

  • Set clear, measurable, achievable, relevant, and time-bound (SMART) goals collaboratively with each employee.  This ensures everyone understands expectations and can track progress.
  • Implement recognition programs that celebrate achievements, both big and small. employee engagement and retention.

Non-Compliance with Labor Laws

Keeping up with the constantly evolving employment laws can be quite a challenge for SMBs. However, overlooking compliance with labor laws could have serious repercussions for your business.

From minimum wage and overtime regulations to anti-discrimination laws and proper record-keeping, failing to comply can result in hefty fines, lawsuits from disgruntled employees, and even damage to your reputation.

How to avoid this?

  • Invest time and resources in understanding and adhering to labor laws
  • Seek guidance from HR professionals
  • Use HR software that keeps you updated on compliance requirements

Remember, a proactive approach to compliance keeps your business safe and fosters a work environment where employees feel valued and protected.

Performance Management is Key for an Engaged Workforce

Outsourced HR Solutions: a Business Partner to Get Things Done

Making the wrong human resource decisions not only makes your workplace less efficient, but it can also create a lot of unnecessary headaches. But if you follow HR best practices and ask for professional advice or support, your business can run smoothly and efficiently.

At Resource Management, we provide HR outsourcing services to alleviate your admin workload and give you back time to focus on what you need most — growing your business. Having a specialized partner who understands your industry handling complex stuff such as payroll processing or benefits administration can help your business thrive. Ready to get started? Contact us today to learn more about our services.

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