There is danger associated with risk. The best way to protect an organization from any risk is to “roll up the carpets, close it down and go home.” Of course, that is not plausible. There are many issues that Human Resources Managers can address to reduce the overall risk to the organization they serve.
In this article, we discuss five of the hidden dangers of Human Resource (HR) Management that many small and mid-sized organizations may not have addressed. As a small or medium sized business owner reading this, it’s important that you consider each of these risk factors. We will be expanding on these in the future, so please, stay up to date by downloading our whitepaper and registering for our newsletter.
Finally, to reduce your risk for all of the below areas, call on Don Swift and Associates, the HR Management Specialists in Wichita Falls, to help protect your organization.
Risk Factors – What are the Five Hidden HR Dangers?
No Written Personnel Policies
Even the most novice HR professional will tell you that the main business advantage to having an employee handbook is in establishing uniform, well defined policies. Good relations with your employees are driven by standardized, consistently applied policies that protect both the business and the employee from risk. Small and medium businesses with no policies in place face challenges with employee disputes. Arbitrators and courts have a sympathetic ear to past employees, so not having written personnel policies can result in judgements against your business, lost productivity, and low morale.
Human Resources Management is very much like the management of other disciplines. Without written personnel policies, it is difficult to train other top and middle managers to apply personnel policies evenly and without bias. The bear-trap of Human Resources Management is when one employee can “prove” he/she was treated differently from another employee. Remember, the onus for proof is on the side of HR Management.
Not Getting Expert Help on Termination
Terminating an employee exposes an employer to huge risks such as employee retaliation, security risks, and various legal claims such as wrongful termination and discrimination lawsuits. Often, the burden of proof for legal claims resides with the employer. This is why it is critical that companies get the help of a specialist to ensure risk is reduced and terminations are handled correctly.
Termination of an employee can be a very touchy business. Many employers shrug off the consequences of a termination not executed in accordance with a principled (well thought out and planned) decision. The expedient decision of just firing someone without due process is seen by many as not giving the employee his/her due and can lead to costly settlements.
Hiring the Wrong Person
So, you hired someone who was a bad fit. What now? There are just a few possibilities, either they are going to realize it first and leave, or you’re going to realize it first and terminate them. Either way, your business is disrupted, your profit has probably taken a hit, and you have to start over with the process of finding someone new. What you’ve learned is the cost of hiring the wrong person. It’s easy to do, but with expert help during the hiring process, it doesn’t have to be as risky to your business.
Hiring is tied to requirements and requirements take into consideration the values, culture, and product/service constraints (responsibilities, duties and skills). Other considerations are training, learning curves, and production goals. All of these figure into selecting the right person for the job. This is a planned and executed process that will result in high recruiting success as well as higher retention rates.
Not Securing Personnel Records
Personnel records contain significant personal information. Now, especially with off-site digital storage, it is imperative to ensure that appropriate systems are in place to protect these records. When records fall into the wrong hands, it can expose your business to significant liability. Use a professional HR person to assess the safety of your records.
It is imperative that HR Professionals understand and execute records maintenance and storage in accordance with federal and state regulations and best practices for document control. Leakage of personnel data is not only costly but will lead to a damaged reputation for both the company and its HR Professionals.
Not Assessing HR Risk
Many companies have never evaluated the risk of HR Management as a stand-alone issue or as part of an overall enterprise risk evaluation for the organization. There is a plethora of risk issues associated with HR Management. For each organization these should be prioritized through an HR Management Risk Review. An HR professional can adequately undertake this for an organization.
HR Risks can include such things as:
- The hiring of personnel who become risks to workplace safety.
- Benefits packages and TPAs which do not protect the Company’s employees.
- Compensation packages and awards that are either not competitive within the industry or are unfairly applied.
- Incorrect assignment of job status.
- Personnel policies which violate state and federal laws.
- Overtime issues – to name just a few.
Human Resources planning is an integral part of addressing risk issues affecting a company and the overall management of activities.
Human Resources has inherent risks that can cost an organization in time, money, and people. Most small and medium sized organizations do not have the expertise on staff, and even if they do, an HR Consultant like Don Swift and Associates can provide a new HR perspective to the organization. The risk is real, and most business owners know that. Get Don Swift and Associates on your side to reduce your risks in Human Resource Management.
We are dedicated to finding the best solution for your needs. As a loyal group of ethical practitioners, we hold confidentiality in high esteem and guarantee you will not regret trying our services. Call us today at 940-228-0550 to receive your free consultation.