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Start-ups are most commonly preoccupied with operations and sales in the early stages of their business. Such is to be expected, especially with bootstrapped start-ups.
However, this preoccupation can result in neglecting other aspects of the business, such as HR and financials. Though HR and financial management oversight don’t have an immediate impact, they should be prioritized as neglecting them can have significant and encompassing effects on your small business.
Check out some of the most common challenges start-ups face when it comes to HR and financial management. Get ahead of these start-up challenges by understanding how to handle them before they even arise and drag your business down.
1. Undefined Policies
One of the most prominent challenges start-ups face is caused by deferring essential tasks, such as clearly defining policies and documenting them, to later. This is similar to setting up a ticking time bomb that will backfire horribly on you.
Job descriptions and scope, as well as policies on attendance, renumeration and reward policies, paid leaves, behavior, and disciplinary action, should be set up before a start-up even begins hiring people.
Though it’s important to get people into the team to get operations rolling, having undefined policies will create ambiguous expectations. This will result in role confusion, miscommunication, work disruption, resignations, or even lawsuits.
A start-up should have clearly defined work conditions in writing and published to get everyone started on the right foot and prevent future issues. This can be done by hiring HR consultants or by outsourcing HR services.
2. Unmaintained Records and Disordered Paperwork
Start-ups that have workers in their employ are subject to the scrutiny of government offices such as the U.S. Equal Employment Opportunity Commission (EEOC), the U.S. Department of Labor (DOL), and the National Labor Relations Board (NLRB).
These government institutions hold companies responsible for proper people management. Hence, start-ups should maintain up-to-date employee records on benefits details, insurance information, and leaves. Moreover, documentation such as employee handbooks, job descriptions, and federal and state forms, like I-9, W-4, and E-Verify, should be regularly reviewed and appropriately organized . Moreover, documentation such as employee handbooks, job descriptions, and federal and state forms, like I-9, W-4, and E-Verify, should be regularly reviewed and organized properly.
You never know when you’re going to need such records and documents. Hence, staying on top of the updates and keeping them all organized and in one place is good practice that helps avoid problems with the EEOC, DOL, and NLRB.
HR experts and consultants can help start-ups by setting up the process for them and showing them the ropes or by contractually maintaining the processes.
3. Poor Hiring and Firing Decisions
Start-ups usually don’t have a dedicated HR expert on hand. Hence, many hiring and firing decisions are made by non-HR experts. This can result in bad hiring decisions that impact the business and, at worst, can result in legal problems that lead to hefty fines and lengthy litigation.
A good way to overcome this problem is by outsourcing HR consulting services. HR consultants who have expertise in hiring know the ins and outs of employment laws and can conduct proper recruitment and management.
HR consultants know how to design job ads to attract the right people. They are also skilled at knowing what questions to ask during the interview to help identify the best candidate for the role. Most importantly, they are capable of conducting background checks to help you avoid hiring the wrong people who may harm your business.
Aside from hiring, HR consultants are familiar with proper termination procedures, which helps you steer clear of issues that may lead to litigation that is not only lengthy but also costly.
HR and Finance Solutions for Start-ups
A lot of the legal and financial problems that start-ups encounter have to do with HR-related challenges that they put off for later. HR processes such as policy documentation, employee record upkeep, and hiring and firing can overwhelm non-HR professionals.
If you’re putting off these important tasks because you’re unsure of the processes, hiring HR consulting services can help you overcome the HR and financial problems most start-ups are plagued with.
FutureSense is dedicated to helping small and medium-sized businesses by offering professional HR services and consultation.Our expertise are hiring, HR strategy, talent management, learning and development, and more.
Reach out to FutureSense today to help your start-up overcome its HR and financial problems!
About FutureSense
FutureSense is a management consulting firm that provides integrated solutions to build and sustain human capital capacity. The firm can work with you by offering support and guidance to manage your workforce. To learn more about FutureSense, please visit FutureSense.com.