7 Scary HR Mistakes to Avoid

Quick look: Scary movies, sweet treats, and costumes are fun. HR blunders are not. Unfortunately, the adage, “you don’t know what you don’t know,” rings true for many small- and medium-sized employers. From ghosting remote employees to overlooking artificial intelligence (AI), here are seven common HR mistakes and how partnering with a PEO can help companies avoid these terrors.

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

Many human resources (HR) departments are experiencing rapidly changing work environments. From ongoing compliance updates to the need to prepare for inevitable change, the hurdles facing today’s employers can be frightening, especially to teams already stretched thin. These challenges can result in noncompliance penalties, unstable footing during adjustment periods, 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 employers 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 or noncompete agreement restrictions
• Asking prohibited questions during an interview
• Improperly administering the 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.

Small business leaders have full hands, and staying on top of ever-changing employment 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: Incomplete change management plans

Change management, or the process of preparing for and managing organizational changes, is critical to the success of any company. According to Harvard Business School, there are two types of organizational change:

• Adaptive changes: Small, gradual changes to evolve a business’s products, processes, workflow, and strategies, like hiring someone new to address an increase in demand or introducing a hybrid work policy.
• Transformational changes: Larger-scale, longer-scope adjustments, such as launching a new business division or expanding internationally.

In the same article, Harvard Business School also outlines best practices for preparing your workforce for transformation, planning the change, implementing adjustments, and reviewing progress. Failure to follow these steps when making workplace alterations, big or small, can lead to:

• Decreased productivity
• Loss of talent
• Customer and stakeholder dissatisfaction
• Declined employee engagement
• Reduced competitive advantage

Mistake #3: AI uncertainty

By 2034, the global AI market size is expected to reach over $3.6 trillion, and the technology is already making a splash in the workplace by helping professionals:

• Automate repetitive tasks
• Improve efficiency and productivity
• Optimize decision-making
• Quickly analyze large data sets

While AI tools are making headlines and increasingly being adopted worldwide, utilizing them without a plan could be a grave mistake. Employers should consider creating a formal AI usage policy—something a PEO’s HR experts can assist with—and aim to:

• Use AI as a resource, not an end-all solution
• Protect employee and customer confidentiality
• Evaluate AI tools’ cybersecurity protocols
• Follow legal guidelines surrounding AI usage in the workplace
• Avoid over-reliance on AI
• Understand AI tools’ limitations

For more tips on implementing AI in your organization, visit our blog, AI in the Workplace: What Employers Should Know.

Mistake #4: Payroll errors

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

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

Mistake #5: 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: It’s no surprise candidates may lose interest if they’ve been left in the dark for weeks (or longer). Employers can keep talent engaged and informed from the first HR introduction to issuing an offer or delivering feedback.
• Be flexible: Many jobseekers balance a full-time job while searching for their next opportunity. Offering virtual interviews and flexible times, especially if it’s an in-person meeting, demonstrates a company’s commitment to accommodating candidates’ schedules.
• Prioritize preparation: Job applicants aren’t the only ones who can prepare for an interview—so can the hiring company. Interviewers will benefit from reviewing 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 #6: Remote workforce regrets

Over 40% of employees work fully remote 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 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. Approximately 3,000 remote workers around the world were recently surveyed, and it was discovered that their second biggest struggle was loneliness. This isolation 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 #7: Benefits blunders

Today’s increasingly diverse workforce wants more than the standard health insurance and retirement savings plan; They 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 a company 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.

With a PEO, HR is all treats and 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 nearly 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-cycle recruiting services: Consultations, job description creation, salary surveys, interview training, applicant tracking, and more (included with our PEO solution at no additional charge)
• 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. Explore our PEO solution, or contact the experts at ExtensisHR to learn more about how we can help you avoid common HR mistakes.