Any business at any stage has risks, but those risks are higher when the business is still new and getting established. While some risks involve the nature of your industry, many risks have more to do with everyday business practices. Managers and HR professionals at growing businesses need to know what these risks look like and what can be done to avoid them. Minimizing the company’s exposure to liability in the early stages is crucial for later success. Here are some common risks for growing businesses that HR professionals and managers should keep an eye on.
One of the biggest risks facing any business, but especially new businesses, falls under the category of hiring practices. The problem here is inconsistency. Managers and HR professionals at young companies tend to hire applicants who have the best technical skills to get that position occupied and keep the business up and running. But sometimes the applicant with the best skills on paper ends up being a poor fit for the company culture and has to be terminated. In order to save time, money, and headaches, HR professionals and managers need to make sure that they, and anyone else involved in the interviewing process, are all on the same page about what the “right fit” means. Make sure everyone knows what questions are okay and what aren’t to avoid any legal problems as well.
Managers and HR professionals at growing businesses also need to protect against a lack of performance management. There are many experts out there who are advising against some of the more traditional corporate practices like those dreaded yearly performance reviews. Many upcoming companies want a more unique and relaxed workplace culture, so they often overcompensate by trying to do away with performance management altogether. But this just doesn’t work, especially for businesses that are just getting started. Employee performance still needs to be evaluated, but HR professionals and managers can try for a system of ongoing feedback instead of the once a year formal meeting. Providing feedback to employees is crucial, especially when you are all still getting your feet under you with the new business. You’ll learn together what’s working and what’s not.
Another pitfall that managers and HR professionals need to avoid in a new business is inadequate documentation. This is a risk that can really come back to haunt your business. Documenting performance protects your company from legal retaliation. Say, you fire an employee for poor performance, but they claim that their termination was an act of discrimination. If you have the documents that detail the employee’s performance issues, you’ll be able to prove immediately that there was no discrimination at all. Lawsuits are costly, time consuming, and stressful, and they can crush growing businesses. It takes time and effort to keep everything documented and stored correctly, but this is an important protection that HR professionals and managers need to keep in place.
There’s nothing more exciting than an new business that’s just getting underway. Give your business the best chance to succeed by understanding and preparing for these common risks.