Leading people is tricky. Not only do you have to get the work done, but you have to deal with different personalities and characteristics that can sometimes be difficult to navigate. Top all of that off with legal compliance and managers can feel as though they are walking through a minefield every day.
Because leaders are human beings, they are going to make mistakes. They are not always going to get it right when it comes to interacting with their people. Most of those mistakes can be overcome. Some may take a while, but if diligent, a good leader can overcome. Some of those mistakes however, can be financially costly. Here is our short list of manager mistakes that could cost your small business big money.
In the Interview:
A classic line I heard from a leader once who I was chastising for asking about marital status in an interview was, “It’s only bad if they sue us.” While that’s true, someday, someone will and then what? The law is very specific about what can’t be asked in an interview. Crossing the line here will be costly at one point or another. Leaders need specific interview training the minute they assume a leadership role. Company’s can not assume that the questions not to ask are common sense. I have seen leaders with tons of common sense ask questions they shouldn’t and not realize they were crossing a line. Anytime a new law like the salary history law comes up, leaders should be aware and given appropriate ways to have the conversation in accordance with the new regulation.
Employee Relations Issues:
Handling employee performance issues and employee complaint properly is crucial to the success of any business. Not doing so can be financially detrimental, especially to a small business. In 2016, 45% of all claims handled by the EEOC were for retaliation. If you look further down the list you’ll see areas that could have been avoided with proper leadership training and appropriate handling of employee relations issues. Now certainly, some of these cases are frivolous and ended in favor of the employer, but they still had to bare the cost of defending the suit and that can sometimes be costly enough in and of itself.
Classifying Employees Incorrectly:
For a while now, the issues of exempt, non-exempt, employee or independent contractor has been a thorn in the side of employers. Employees who are classified as salaried in an effort to avoid paying overtime may be due tremendous amounts of back payment if found to be classified improperly. Independent contractors who should be classified as employees can be due not only back pay but all other rights employees are afforded such as benefits or payment for time off. Small businesses should check with a knowledgeable resource whenever creating a new position to ensure it is classified properly. If there is any doubt that current employees are classified correctly, a full audit should be conducted.
Closely related to dealing with employee relations issues is inconsistency in word and deed. This inconsistency could manifest in the way one employee is treated over another or by a handbook that highlights benefits employees actually do not receive. Inconsistent behavior, however it presents itself, is an easy gateway for a lawsuit. Handbooks should be reviewed annually to ensure they are up to date and leaders should be trained on focusing on equality and consistent behavior.
As mentioned several times throughout this article, the key to avoiding many of these costly mistakes is proper training. If your company does not have some level of leadership development program, or at a minimum, a leadership orientation, then one should be considered. Any one of these issues can be taken to the point that can be financially crippling for a small business.
At the same time, these are issues that can be easily mitigated with the right processes in place. It is one of those areas that the time it takes to ensure compliance and consistency is much less than the time it takes to defend the reverse. It’s time well spent for any business.