7 mistakes small business owners need to avoid when it comes to human resources management

Today’s business environment and issues facing small (6 to 100 employees) to medium (101-500) sized employers are often the same as those faced by major institutes and organizations. Regardless of the size or industry, employment problems are generally due to:

  • Poor hiring practices
  • lack of knowledge of compliance issues
  • failing to have even simple policies in place—and following them
  • poor communication

Even a small business needs to maintain their competitive edge by hiring and retaining the best employees. Many small business owners wear many hats overseeing the business, the financial status, the physical plant and often time doing the work done by human resource professionals. Here are a few things I know can go wrong—and be very costly–when a small business owner fails to seek appropriate advice or counsel.

  1. Failing to know what rules and regulations apply to your workplace or  presuming it doesn’t apply to your workplace
    • It is important for all employers to know their compliance threshold: businesses with 1 or more employees are subject to more than 10 federal labor laws; a business that grows to 50 employees can be covered by as many as 20 labor laws; and in Massachusetts, employers with 6 or more employees are subject to almost all state fair labor practices/laws
    • The broader law prevails: whether federal or state
  2. Failing to have someone responsible for monitoring compliance
  3. Failing to understand the consequences for ignoring compliance
  4. Failing to have written policies that establish the benefits and expectations of your workplace
  5. Failing to keep adequate and/or required records including: employee data, time records, payroll records
  6. Failing to perform simple steps to avoid employee problems:
    • Checking references on all potential employees
    • Failing to communicate “effectively” and clearly stating the expectations of the job and the workplace behavior
  7. Assuming no one will ever sue

Small businesses will do well to weigh the high costs associated with ignoring these recommended business processes vs. the low cost of investing in effective human resource or personnel advice and counsel. Such an investment can mean the difference between success and failure of a business. Having even simple policies helps to reinforce expectations, practices, procedures, rules, and standards.

Poor communication includes failing to establish performance standards, expectations of work standards and rules to new employees, as well as failing to monitor performance and addressing any issues immediately and appropriately. Making decisions based on misinformation, faulty perceptions or assumptions will be costly to even the smallest employer.


Guest poster Patricia Sweeney has more than 35 years’ experience in human resources management and consulting in all aspect of employment issues with a expertise in compliance, policy development and employee relations. She has worked in both the public and the private sectors with small to medium sized organizations. She may be reached at hrm02188@aol.com.


  1. Great reads out on the internet, but sometimes you don't have time to find them!

  2. Time_Clocks says:

    If you fail to plan, then you plan to fail.

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