Everything The CEO Optometrist Needs to Know About HR – Part 3: 5 HR Mistakes to Avoid

Managing human resources (HR) can be one of the most challenging aspects of running a small business. HR involves the complexities of working with people, which don’t fit neatly on a spreadsheet. Yet, it’s crucial because employee salaries and benefits constitute a significant portion of your operating expenses.

Your employees are one of your greatest assets, and managing them effectively is essential for the success of your practice.

In Part 1 of this blog series, we discussed what HR is and why it’s important to understand it for your practice. In Part 2, I showed you how to implement a strong HR strategy and provided links to tools for creating your own manual. Now, in Part 3, we’ll cover five critical HR mistakes to avoid. Let’s dive in!

HR Mistakes to Avoid

There are five common HR mistakes that many small businesses make, according to author Margaret Jacoby. These mistakes can cost your practice dearly in the long run—both financially and in wasted time.

1. Hiring the Wrong Person

Many practices rush to fill open positions, especially when they are under pressure. Unfortunately, this can lead to bad hires, which typically occur when shortcuts are taken during the hiring process. While there’s always a risk with any new hire, a comprehensive screening process can significantly reduce that risk.

Since the cost of hiring and training new employees continues to rise, I recommend doing your due diligence by thoroughly vetting candidates before making any decisions. If you do find yourself in a bad hire situation, it’s usually best to make a change as soon as possible.

Here’s how you can handle a bad hire:

• Address the issue directly: Share your concerns about performance with the employee. You might discover workable alternatives or determine the true extent of the problem.
• Weigh the cost of keeping the hire: Assess the impact of a bad hire on your team and practice. Sometimes the cost of retaining them is simply too high.
• Handle the transition professionally: If the relationship can’t be salvaged, focus on making the departure as smooth as possible. Be direct but respectful if you need to let someone go.

2. Undefined Job Roles

Some practices prefer to keep job descriptions “open-ended” to encourage cross-training. However, it’s much more effective to provide specific expectations for each role. You can’t hire the right person if you’re unclear about the job they’ll be doing.

Clear job descriptions benefit both the employer and the employee. They provide a mutual understanding of the role, making hiring, evaluations, and even terminations smoother. A well-written job description doesn’t need to cover every task but should include the following critical components, according to HRDailyAdvisor.com:

• Job title and reporting structure: Include job title, pay range, reporting relationship, and potential for overtime or weekend work.
• Key responsibilities: Outline the general responsibilities, key tasks, and expected outcomes of the position.
• Qualifications: State the education, experience, and skills necessary for the role.
• Special demands: Include any physical or environmental conditions related to the job (e.g., heavy lifting, standing for long periods).
• Job duties: Identify tasks that make up 90-95% of the role and list them in order of time consumed or importance.

3. Lack of Performance Documentation

Performance appraisals are critical for providing feedback, clarifying expectations, and fostering open communication. They should be conversations between management and employees, offering both praise and constructive criticism.

It’s important to document all performance reviews, meetings, and issues—whether positive or negative. Should you need to terminate an employee, having documentation can protect your practice from potential legal action.

A thorough performance appraisal should include three key elements:

1. Performance analysis: Compare the employee’s performance to the standards outlined in their job description.
2. Potential for growth: Evaluate the employee’s ability to take on more responsibility within the practice.
3. Deficiencies: Identify areas where the employee needs improvement, and provide specific examples and recommendations for corrective action.

4. Ignoring Employment Laws

As a practice owner, you must comply with all employment laws, regardless of your business size. Ignorance or purposeful disregard won’t protect you from legal action. The U.S. Department of Labor highlights three key areas of employment law every business owner should be aware of:

• Wages and hours: The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, and recordkeeping standards. You must ensure that non-exempt employees are paid at least the federal minimum wage and overtime pay when applicable.
• Workplace safety: The Occupational Safety and Health Act (OSHA) ensures safe working conditions. OSHA standards apply to most private industries, so make sure your workplace complies.
• Employee benefit security: The Employee Retirement Income Security Act (ERISA) regulates pension and welfare benefit plans. If you offer benefits, you must meet the fiduciary, reporting, and disclosure requirements outlined by ERISA.

For more information on employment laws, visit Dol.gov.

5. Misclassifying Workers

Many practices use independent contractors to save on payroll taxes and simplify payroll management. However, some misclassify their employees as contractors, which can lead to serious legal and financial consequences.

The IRS has strict guidelines for determining whether someone is an employee or an independent contractor. Misclassification can lead to penalties, so it’s crucial to ensure that you’re following the rules. Here’s a quick reference for distinguishing between an employee and an independent contractor:

For more detailed guidelines, check out the IRS’s website.

Conclusion

Getting your human resources policies in place early will help you handle issues as your practice grows. Mistakes like the ones outlined above can lead to major problems, including employee dissatisfaction and legal trouble.

HR is a vast subject, and there’s always more to learn. If you want to dive deeper, check out articles on HR best practices, talent management, employee experience, and HR innovation.

Next week, we’ll explore how technology has transformed HR, especially in the realm of employee online activity. We’ll also discuss how to leverage these changes for your practice’s benefit. Stay tuned!

If you’re feeling overwhelmed by the idea of building your HR manual alone, don’t worry—I’m here to help! Through my CEO of YOU™ Consulting Program for private practices, I can guide you through the process of creating a customized employee manual. Let’s work together to elevate your practice!

Want to take your practice to the next level? Click here to sign up for the CEO of YOU™ Consulting Program.

Until next time, remember to Dream Big, Take Risks, and Become the CEO of YOU™!