Small businesses, those with 500 or fewer employees, are a major economic driver. Often, small businesses focus significant time and energy on growth but do not spend equal time developing the infrastructure necessary to support the growth. This includes human resource infrastructure. While this is understandable given the significant time demands facing small business owners, small businesses need to understand the increased risks they face if personnel infrastructure is not a priority.
According to a 2015 report by specialty insurer Hiscox, one in five small and mid-size businesses, under 500 employees, will face employment charges in front of the Equal Employment Opportunity Commission and/or its state counterparts with an average cost to defend of $125,000. Costly and time consuming problems and lawsuits can be lessened and in some instances avoided with advance preparation and careful handling of personnel matters.
- Keep Abreast of Changing Laws and Regulations. Federal, state and local laws, regulations and requirements relating to employment change constantly. Utilizing seasoned human resource professionals and employment attorneys to help keep up to date with changing requirements will be less costly than dealing with problems related to non-compliance.
- Define Expectations. Use job descriptions and clearly articulated employment policies to de ne what you expect from your employees. Have policies and handbooks reviewed by employment counsel to ensure you have included necessary information and have not included policies or language that may run afoul of the various laws.
- Manage Performance Effectively. Employers who discipline or discharge employees for performance problems without first counseling and warning them about the issues invite lawsuits that are di cult and expensive to defend. In a survey by Dan Gallipeu of Dispute Dynamics, Inc., 88% of jurors polled believe it is okay to re poor performers, but 74% think employers must give fair warning before ring, ensure that the employee understands the problem, and work with the employee to correct the problem. 90% believe the company is negligent if it does not properly document performance problems.
- The golden rule of effective performance management is document, document, document. Document day-to-day performance issues and conversations with the employee so it is clear the employee is aware of the unacceptable behavior and what is expected in the future. If unacceptable behavior does not change after one or two coaching conversations, use written warnings to summarize the history and describe the expectations and timetable for change as well as the consequences of failing to timely correct the behavior.
- is contemporaneous;
- specifically describes the behavior or performance that must change;
- is factual and avoids expressing personal opinions, accusations, generalities, and legal and medical conclusions;
- describes expectations;
- includes the employee’s explanation and participation in setting goals and timetables;
- details the action plan, goals moving forward, timetable, and potential consequences; and
- includes documentation of the follow-up, noting both improvement and failure to improve.
- Conduct regular, accurate, honest and unambiguous performance evaluations. Although it can be di cult to give negative feedback, failing to include unfavorable comments regarding performance on an evaluation, when justified, can create difficulty later on. While performance evaluations should not take the place of day to day performance documentation, failing to note negative issues in a performance evaluation will make it more difficult to later explain why discipline or termination was necessary. Train supervisors on proper documentation and preparing evaluations and have evaluations reviewed by a higher management.
Sherry Janssen Downer is a labor and employment attorney in Tucson and serves on the Tucson Metro Chamber’s
Executive Committee as secretary.