How ignoring HR is damaging your business.

February 13, 2020

How ignoring HR is damaging your business.

What is HR?

When the acronym HR gets floated around, it is often associated with negativity, too much hustle or just a compliance burden. However, the reality is that HR is such a vital function in any business regardless of the size.

HR or Human Resources management comes down to not only what is considered largest asset, but also the greatest liability in any business, its people. As for managing your staff, there are a lot of things you need to take into consideration. First, what are my obligations as a business owner? What are the potential risks to my business? How about the potential consequences? Once you have done a bit of brainstorming, you will start to think of HR as an insurance policy: it protects what you have worked hard to achieve.

Let us break it down

Managing your compliance is certainly not the most enjoyable part of running your business. However, the reality is that if not done properly, your business could be exposed to many risks.

Let us take the employment agreements (i.e. contracts) for example. Employment Agreements set the conditions of the relationship between you as the employer and the employee. This includes expectations of the staff, compensation, conditions of work..etc. Hence, you want to ensure that you protect your business when a staff member leaves you, by applying post-employment restraints, intellectual property and confidential information clauses, just to name a few. These clauses can be critical for your business, especially when a dispute case with a former employee or subcontractor leads to reputational damage, or even worse, loss of clients.

Company Policies are another set of documents that further safeguard your business. Are you mandated by law to have them? No. But as soon as you engage in any staff termination, or face behavioral issues (e.g. use of mobile phone job, negligence, unreliable workers..etc), too often you need to demonstrate in writing that this staff member knew their conduct was not allowed. Hence, although not always mandated, it is highly recommended as best practice to have a full suite of policies to protect your business.

Then we have job or position descriptions. The most underrated document in any business’ documentation arsenal. This document sets the understanding of what you require from your staff based on their performance. This is also a critical document to allow someone to do a lawful award interpretation on what you should be paying them. With Fair Work currently building momentum with wage theft, why would you leave yourself and business exposed by not managing an avoidable issue correctly?

What about your WH&S obligations? Making sure you are following the correct procedures when it comes to training staff on manual handling, plant and equipment, and just general everyday tasks. This means your staff are happy and healthy, and the workplace environment is safe and healthy for everyone involved.

Is it really necessary?

Have you ever actually investigated what hiring a staff member costs you in the first 3 months? We all know this is the vital period, where a staff member can become really engaged, or simply decide your business is not for them.

Given that these costs are not usually on an invoice or a receipt, it is not something one would actively think about and manage. Nevertheless, the cost to your business is significant. For example, for someone on an average $70,000 salary in the first 3 months, the recruitment for such a role can cost your business up to $25,000 in fees. Now imagine if you turn over 3 staff members in that role, that easily sums up to $75,000 from only one role.

Managing your HR effectively helps in mitigating such risks, which in turn translates to not only saving money, but also an engaged workforce who are generating you a decent Return On Investment (ROI) on a consistent basis.

The reality is that, for many businesses, they can be compliant today but even when the legislation changes slightly, it results in the business not being compliant. As pace of recent legislative changes is unprecedented, yearly reviews of policies no longer make the cut. Not being compliant is more than just a legal risk. It means your business is facing a potential significant financial burden, thanks to the hefty Fair Work fines and associated legal costs.

It is clear from recent Fair Work cases, that they have impacted business significantly, at time resulting in businesses going into administration. Even if it does not get to that stage (which we certainly hope it doesn’t!), the opportunity cost of managing a dispute and the unnecessary stress and anxiety associated with a claim is just not worth it.

Make this the year to make you HR happy!!

This year, your HR professional is just as important as your accounting professional, and hence, appropriate management of your HR does set you up for long term sustained success. There is no need to do this on your own. There are extremely affordable options out there (Like Happy HR), that can help you automate a lot of these HR processes, update the relevant documents to achieve continual compliance, and more importantly make your staff happy.

With our friendly team HR Consultants at your disposal, let’s make this your best year yet, and work towards not only protecting your business but also keeping your staff happy!

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About the author: Christopher Smith - CEO

Founder | Chief Happy Officer at Happy HR - Ensuring we have a happy platform, service mix and team of A grade people! View on Linkedin

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