RSM Resources

Think because you're a small or midsize organization - with 50 or fewer employees - you don’t need someone overseeing human resources? Think again.

With all the federal, not to mention state or local, laws that companies are required to follow, you need someone — an internal HR professional or an external HR consultant — at the helm ensuring your company is minimizing risks in administering HR programs.

Did you know:

• All employers must complete I-9 forms for new hires?
• There are specific retention requirements when an employee terminates?
• If you have three or more employees, you must carry workers’ compensation?
• A company can’t arbitrarily determine whether an employee is exempt from overtime because you don’t want to pay overtime for hours worked beyond 40 in the workweek?
• Many companies have a military leave policy, think they’re in compliance, but aren’t following the regulations under the Uniformed Services Employment and Reemployment Rights Act because they didn’t know they needed to?

Unfortunately, ignorance is not an excuse. If the individual responsible for HR functions doesn’t have an HR background, there are many unintentional mistakes that could occur. The importance of training your supervisors can’t be stressed enough. The lack of skilled HR staff might not only cause your company to pay out dollars for claims that could have been avoided, it may result in poor hiring decisions. And if someone turns out to be a bad hire but is still allowed to continue working — even though performance isn’t up to standard — it brings morale down for others and can trigger good workers to leave. 

In addition, if your organization fails to conduct thorough reference, credit and criminal background checks, you could potentially be setting yourself up for problems. According to a Society for Human Resources Management white paper — “Why Small and Medium-Sized Organizations Really Do Need an HR Function” — a survey conducted over the course of six months by InfoLink Screening Services discovered that 8.3 percent of all job applicants had criminal records; 3.3 tested positive for illegal drugs and 26.4 percent had discrepancies in their work history.

An HR staff member or consultant also helps determine when it’s OK to terminate an employee after appropriate counseling, warnings and documentation has been completed. Some companies use the term “probationary period,” which leads employees to think after that timeframe they can only be terminated for cause.

Other organizations believe “at-will” employment (termination of an employee for any or no reason) gives them carte blanche, but the truth is there are times you can’t use an at-will principle. HR staff can ensure proper steps have been taken to minimize possible lawsuits and manage the introductory period for new hires — holding supervisors accountable for determining, early on, whether an employee is going to be successful or should be terminated.

Handbooks are a vital tool in helping employees understand company policies and procedures, standards and expectations and rules they’re expected to follow. Mistakenly, many small organizations believe it’s OK to borrow or cut-and-paste a handbook from Internet resources. This can create major issues especially if your company is located in multiple states. If supervisors administer policies inconsistently, employees may take legal action if they feel they’re being treated unfairly.

Since employees typically represent 20 percent to 30 percent of operating expenses; it’s good business to consider an experienced internal or external HR professional. They can manage assets and minimize liabilities and incurred costs for non-compliance or lawsuits — not to mention improve productivity and profitability by hiring correctly and retaining properly.

Kay Robinson is a director with RSM McGladrey. For more information, contact her at kay.robinson@rsmi.com.