The Risk of Not Having HR In Charge of HR (Even For
Small Businesses)
By:
Lisa Kay
President
and Lead Consultant
Many small business owners believe that
they can save money if their ‘people issues’ are handled by a senior manager or
other (ie. finance) professional. This
is not uncommon, but yet quite a risk.
It is important to understand the potential liabilities and costs of not
hiring an HR professional, before deciding whether this is the best course of
action for you.
Organizations today are dealing with
various HR issues, including (but not limited to) high rates of employee
turnover, absenteeism, competency gaps, training and development, employee terminations,
sexual harassment allegations, workplace violence, health and safety compliance
issues, performance management and discipline, wrongful dismissal claims, succession
planning, Human Rights violations and more.
If not managed professionally (and legally), each of these functions
pose a costly threat to any company.
As Irving Burstiner wrote in The Small Business Handbook, "Hiring
the right people—and training them well—can often mean the difference between
scratching out the barest of livelihoods and steady business growth…. Personnel
problems do not discriminate between small and big business. You find them in
all businesses, regardless of size."
Even though they do not generally have the
same volume of human resources requirements as larger organizations, they do
face personnel issues that may have a significant impact on their business.
There are many surprising statistics which
highlight the importance and potential costs to a variety of HR issues. It is interesting to note that:
- 53% of all job applications contain inaccurate information, and 34% of all application forms contain outright lies about experience, education, and ability to perform essential functions on the job.
- Employers have lost more than 79% of negligent hiring cases
- According to the Allied Workforce Mobility Survey (2012), companies lose 25% of all new employees within one year.
- A study on onboarding, “Getting On Board: A Model for Integrating and Engaging New Employees” found that 90% of employees decide whether they will stay at an organization within the first 6 months on the job. The study found that onboarding employees during their first year of employment increased retention rates by 25 percent.
- 30%-40% of supervisors’ and managers’ daily activities are devoted to dealing with conflicts in the workplace
- A complaint that escalates to a lawsuit can cost $50 000 to $100 000 and take three to five years to settle.
- “Presenteeism” is when employees with the intent to resign do not leave the organization. These employees generally have lower commitment, be more dissatisfied with their jobs, reduce morale in the area in which they work and do not complete their share of the work (which causes workload problems for others in their department).
- The rate of '”presenteesim” is estimated to be as much as three time higher than absenteeism.
- Job stress is a key factor in health care costs. According to the Journal of Occupational Environmental Medicine, “health care expenditures are nearly 50% greater for workers reporting high levels of stress."
- About one-third of workers report high levels of stress. This can create a burden for employers in health care costs, periods of disability, absenteeism, job turnover and poor productivity.
Hiring a Human Resources professional
and/or outsourcing your HR function on a contract or a part-time basis will
provide your business with the guidance and expertise to help avoid liability,
minimize risk and unnecessary costs. At
the same time, this will be an investment in your most valuable asset – your
people, which ultimately can positively impact your bottom line through increased
employee engagement and productivity, improved morale, better hiring decisions
leading to higher retention.
For more information visit my website: www.peakperformancehr.com
Resources:
Irving Burstiner, The Small
Business Handbook, Simon and Schuster Inc., New York, January 5, 1994
Warren Shepel [online], Health & Wellness
Research Database, 2005
Taylor, Robin, Workplace
tiffs boosting demand for mediators. National Post Mar. 17/03
Duxbury & Higgins,
Work-Life Conflict in Canada in the New Millenium: A status Report, 2003
Dana, Dan, [online] The
Dana Measure of Financial Cost of Organizational Conflict, 2001
Corbitt Clark, Mary,
[online], The Cost of Job Stress, mediate.com
National Institute for
Occupational Safety and Health (NIOSH). Stress At Work Booklet. Publication No.
99-101.
