When starting your own business there are countless things to consider, from developing a business plan to financing to location hunting to branding to marketing and everything in between. In the flurry of excitement that comes with tackling these major tasks, it can be easy to overlook other important considerations that may not immediately spring to mind – particularly those that pertain to human resources. Consequently, startup founders tend to be at a higher risk of making major HR mistakes that could threaten the long-term success of their companies.
If you have recently established your own startup, it's important to be cognizant of the significance of HR, and be aware of some of the common mistakes that new organizations make in this area, in order to avoid them. Common HR mistakes you should take pains to avoid include:
1. Failing to outline policies in writing
As detailed by Entrepreneur contributor Andre Lavoie, your company should have an array of policies, on everything from benefits, to dress codes and expected employee conduct. Simply having those policies in place isn't enough, however. Your startup should commit all policies to writing in the form of an employee handbook, which should be made available in hard copy or online. Without official guidelines in writing, your employees will be more able to claim they were unaware of certain policies in the case of an infraction, even if it that isn't necessarily true. Lavoie stressed that communication is also key here: When it comes to workplace polices, no employees should be left in the dark. Hold routine information sessions about important workplace policies and always inform all employees company wide when changes are implemented.
"Your startup should commit all policies to writing in the form of an employee handbook."
2. Asking questions that are illegal
As a startup founder it's likely that you'll be wearing many hats, not only overseeing the foundation of your company but also interviewing candidates for positions. If you do not have a background in HR compliance, however, you may be unaware that when it comes to asking questions in interviews, the process carries a high risk of legal infractions. This is because, as explained by journalist Dan Lambert, writing for YFS Magazine, it is illegal to ask certain questions, particularly as they pertain to a candidate's personal life or protected characteristics such as age, nationality, religion and so on. Lambert explained that common examples of questions that many may not know are illegal include asking about a candidate's country of origin and marital status. Another major no no is asking candidates whether they are pregnant, plan to become pregnant or even whether they have any children. The most effective way to avoid these legal pitfalls is to keep lines of questioning as professional as possible. While it can be helpful to build a friendly rapport with candidates, be sure not to ask anything too personal. Questions such as "what school did you go to?" and "are you a sports fan?" are more acceptable.
3. Not helping employees to grow professionally
Neglecting employee development is a common issue, particularly in startups where myriad other issues and concerns tend to take precedence. As Jessica Stillman argued, however, writing for Inc., ensuring that employees receive routine training sessions and are encouraged to develop their careers is crucial for startup success. After all, a company is only as effective as its workforce, and without engaged and determined employees, your startup will likely suffer. Stillman interviewed Robert Siegel, a Stanford based professor, who elaborated on this important point.
"Employers must ask themselves certain questions: Are you giving your employees the tools to be effective in their jobs? Are you providing them with tools to grow their careers? Are you enabling opportunities for them to accomplish all the things they want to do?" he explained.
4. Hiring too quickly
In an effort to get your startup running as quickly as possible, it can be tempting to make fast hiring decisions. This can be a major mistake, however. As Lavoie argued, if you fail to spend enough time searching for the right candidate, in terms of qualifications and cultural fit, you run the risk of making poor hiring decisions that could cost your operation a considerable amount of money in the long-term. Indeed, Lavoie reported on a widely cited study from Career Builder, which found that $50,000 is the average cost of just one poor hiring decision. The most effective way of avoiding falling into this trap is to ensure that your hiring process is thorough and standardized across the board- do not make a hire without developing a clear job description and be sure to ask detailed interview questions. Also follow up with references at all times. Lavoie noted that it can help to have at least two rounds of interviews, with more than one interviewer. This approach allows for greater insight into the candidate, with team members coming together to decide whether the individual in question is a strong fit for the company.
5. Failing to effectively understand laws and regulations
When hiring candidates it can be easy to overlook or become confused by the plethora of state and federal regulations that pertain to employment, Lambert explained. Ignorance in this area could be disastrous for your company in the long-term, however, and increases your risk of falling into legal trouble. The most effective way to avoid this is to conduct extensive research into mandates – the Department of Labor's website is a good place to start – or hiring a qualified HR professional with expertise in labor laws.
Consider an HR outsourcing company
Given the complexities of HR compliance, opting to enlist the services of an HR outsourcing company can be an effective move. Indeed, according to journalist James Bucki, writing for The Balance, outsourcing can be beneficial for startups in a number of ways: It can be more flexible, more cost-effective and it can allow you the freedom to focus on the areas of business in which you have expertise. Seeking help from an HR outsourcing company can also afford you peace of mind – you'll know that all of your HR needs are being met by qualified professionals with extensive experience.
AlphaStaff can offer your startup an array of HR services, through a special co-employment relationship. Tailored to meet your specific needs, from employee administration services to HR management and insurance, AlphaStaff can help ensure that your organization avoids some of the common and potentially costly mistakes listed above. To learn more about AlphaStaff, click here.