5 HR Mistakes to Avoid

Quick look: Scary movies, sweet treats, and costumes are fun. HR mistakes are not. Unfortunately, the adage, “you don’t know what you don’t know,” rings true for many SMB employers. From compliance mishaps to ghosting remote employees, here are five common HR horrors and how partnering with a PEO can help businesses avoid these terrors.

Ghouls and goblins aren’t the only ones serving up scares this spooky season.

Many human resources (HR) departments have recently experienced rapidly changing work environments. The hurdles created by ongoing compliance changes, an increasingly dispersed workforce, and balancing company culture with employees’ growing demand for flexibility can be frightening. These challenges can result in noncompliance penalties, losing top candidates to your competition, and watching tenured employees slip away in search of greener pastures.

Even businesses with the best intentions can succumb to these frights. However, understanding what causes these common HR mistakes and how to avoid them can help your small- or medium-sized business (SMB) ward off any challenge that creeps up.

Mistake #1: Compliance confusion

Few things are more chilling than finding out your business is non-compliant and subject to fines and penalties. The worst part? Many SMBs are unaware of the vast range of compliance requirements, opening their organization up to countless liabilities.

The list of possible violations is long and includes things like:

• Being unaware of salary transparency laws, noncompete agreement restrictions, and more
• Asking prohibited questions during an interview
• Improperly administering Consolidated Omnibus Budget Reconciliation Act (COBRA)
• Not notifying workers about their Family and Medical Leave Act (FMLA) protections
• Mismanaging workers’ compensation claims, workplace safety and harassment issues, etc.

SMB leaders have full hands, and staying on top of ever-changing HR laws can be cumbersome. This is why some businesses partner with an outside source, like a professional employer organization (PEO), to manage their risk and compliance needs.

Mistake #2: Sloppy payroll processing

Correctly processing payroll isn’t as simple as handing over agreed-upon wages to employees—there’s a terrifyingly high number of things that can go wrong.

Common payroll errors include:

• Taking out the wrong amount of taxes and deductions
• Not paying employees on time
• Misclassifying workers
• Inaccurately tracking staff’s hours and overtime
• Failing to file W-2s and W-3s properly

There are a lot of moving parts are involved with payroll and tax management, which is why many SMBs also outsource this function to a PEO.

Mistake #3: Top talent losses

Nothing haunts business leaders more than finding a highly qualified job candidate and sending them an offer letter only to find out they’ve accepted a position with another company.

An inefficient hiring process often causes this nightmare. To improve their chances of landing top talent, SMBs should:

• Continuously communicate: Can you blame a candidate for wanting to work elsewhere if they’ve been left hanging for weeks (or longer)? Employers should keep talent engaged and informed from the first HR introduction to issuing an offer or rejection letter.
• Be flexible: Many jobseekers are juggling hunting for their next career move with working a full-time job. Employers should consider offering virtual interviews and flexible times for interviews (especially if it’s an in-person meeting).
• Prioritize preparation: Job applicants aren’t the only ones who should prepare for an interview—so should the hiring company. Interviewers should review the candidate’s resume, ensure their calendar is free during the scheduled interview, and come prepared with several questions.
• Stay focused: First impressions matter. Over 75% of job candidates feel how they’re treated during the hiring process reflects how a company treats its employees. Interviewers should make eye contact, avoid multitasking, and turn off their computer and phone notifications during the interview.

Mistake #4: Remote workforce regrets

Over 40% of employees work from home or on a hybrid schedule. But just because these work arrangements have become commonplace doesn’t mean they are simple for employers to navigate.

It’s all too easy for SMBs to hire remote employees without realizing what’s involved. For example, if employees work in a different state than the business’ office, employers may be on the hook for paying additional taxes, including:

• State unemployment tax
• City taxes
• School district taxes
• Workers’ compensation tax

Each state also has different requirements for things like:

• FMLA
• Anti-discrimination laws
• Daily overtime limitations
• Noncompete agreement enforceability
• Paid time off (PTO)
• Sick pay
• And more

Failing to adapt company culture to include remote employees may leave some workers feeling ghosted. Over 1,000 remote workers in 55 countries were recently surveyed, and it was discovered that more than half feel lonely “often” or “some of the time.” This loneliness can result in lower employee engagement, decreased profitability, and higher turnover.

To combat these feelings of disconnection, SMBs can boost their virtual company culture by aligning their physical and virtual operations, starting a virtual mentorship program, hosting special events, and more.

Mistake #5: Benefits blunders

Today’s workforce wants more than the standard health insurance and retirement savings plan. They are increasingly diverse and seek benefits that meet their specific needs, and continuing to offer one-size-fits-all benefits may prove to be a monstrous HR mistake. For example, younger employees may seek student loan assistance and family-forming support, while older workers may prioritize more robust health coverage and financial planning services.

Even if an SMB offers many benefits, things can still go wrong. Inadequate benefits communications mean employers won’t maximize their return on investment, and workers will only take advantage of some of what’s available. Common communication errors include:

• Sending infrequent, confusing, or incomplete messages about open enrollment and benefits options
• Failing to send employees their plan documentation and summary plan description
• Neglecting to send information about plan updates

While troublesome, these HR mistakes can be avoided by relying on a PEO to handle your benefits administration and management.

All treats, no tricks

HR is often more complex than many SMBs realize. And because employers don’t know what they don’t know, they often unknowingly open themselves up to HR mistakes like compliance violations, payroll inaccuracies, and more.

But fear not! The right PEO can help businesses stay in control of virtually every aspect of HR. A PEO, like ExtensisHR, for example, provides:

• Risk and compliance services: Workers’ compensation, state unemployment claims management, safety assessment, and more
• Payroll and tax administration: Payroll processing, PTO setup, payroll tax processing, and distribution of checks, direct deposit, and payday cards
• Full-service recruiting services: Consultations, job description creation, salary surveys, interview training, applicant tracking, and more (for no extra fee)
• Benefits administration and management: Access to competitively priced Fortune 500-level benefits, benefits compliance services, and consultations on renewal, open enrollment, and more
• Dedicated HR guidance: An assigned HR Manager to help you with all things HR (return to work policies, employee handbook updates, policy and procedure development, etc.)

Halloween is spooky, but your HR doesn’t have to be. Contact the experts at ExtensisHR to learn more about how we can help you avoid common HR mistakes.