5 Common HR Mistakes Small Businesses Make (and How to Avoid Them)
When you’re focused on growing your business, it’s easy for human resources tasks to take a back seat. But neglecting HR—even unintentionally—can lead to costly mistakes, employee turnover, or even legal trouble. At The Eilers HR Group, we’ve seen it all—and we’re here to help you steer clear of the most common pitfalls.
1. Skipping Employee Handbooks and Policies
Many small businesses operate without a formal employee handbook. While this might work at first, the lack of clear policies can lead to inconsistent practices, confusion, and legal risk.
How to Avoid It: Create a customized, legally compliant handbook that outlines expectations, benefits, policies, and procedures. It protects both you and your employees.
2. Misclassifying Employees
Improperly classifying employees as independent contractors, or exempt vs. non-exempt, is a common and costly error. This mistake can lead to unpaid overtime claims and tax penalties.
How to Avoid It: Review job roles with an HR professional or employment law expert to ensure proper classification in line with federal and state guidelines.
3. Failing to Document Performance Issues
When an employee issue arises, many small business owners handle it verbally and hope for the best. But without documentation, resolving problems—or legally defending your actions—becomes much harder.
How to Avoid It: Keep written records of performance discussions, disciplinary actions, and improvement plans. Consistency and documentation are key.
4. Overlooking Compliance Updates
Employment laws change frequently, and staying up to date is critical. Ignoring new regulations around wage laws, leave policies, or harassment training can lead to violations.
How to Avoid It: Work with an HR partner who actively monitors compliance updates and helps you adjust policies as needed.
5. Neglecting Onboarding and Training
A rushed or unstructured onboarding process can leave new hires confused, unengaged, or likely to leave. Similarly, skipping ongoing training leads to stagnation.
How to Avoid It: Create a structured onboarding process and invest in continued training and development. It pays off in retention, performance, and culture.
Final Thoughts
No business sets out to make HR mistakes—but without the right support and systems in place, they can happen all too easily. The good news? Every one of these issues is preventable.
At The Eilers HR Group, we help small businesses build smart, sustainable HR practices that support growth, protect the organization, and keep teams thriving.
Need help tightening up your HR practices?
Book a free consultation with The Eilers HR Group and let’s get your HR on the right track.
