3 HR Problems That Will Crash Your Business

3 hr problems that will crash your business - house of cards falling

The Fragility of Business

Running a successful business requires more than just a great product or service. That helps, but It demands efficient management of your most valuable asset (or rather, your most necessary P&L expense for the finance folks): your people. The fragility of businesses is often underestimated, as even minor HR problems can quickly snowball out of control and potentially lead to the downfall of a company. Here are just a few ways this can happen:

  • A lack of employee engagement can contribute to decreased innovation, lower customer satisfaction, and increased turnover, all of which can weaken the business’s overall resilience.
  • Constantly hiring and training new employees can be time-consuming and costly, affecting the overall stability of the business.
  • Unskilled employees lead to inability to adapt to changing market demands and technology, leaving the business weak and vulnerable.
  • Inconsistently applied benefits and policy leads to legal issues when employees come back claiming wrongdoing from the business.
  • Lack of real diversity causes bad ideas and behavior to run unobstructed, stifling creativity and extinguishing ideas that increase competitiveness.

HR & People Ops plays a crucial role in creating an environment for the business to thrive and respond well to market forces. However, certain HR problems, if left unaddressed, can have catastrophic consequences for your business. In this article, we will explore three critical HR issues that can potentially crash your business and how you can identify and correct them, or avoid them altogether.

1. Inadequate Hiring Practices

A strong foundation begins with hiring the right people for your organization. Those people sell your goods & services, promote your brand, create your internal organization, and make up its culture that is put on full display to your customers. Finding and selecting qualified candidates is challenging, but it’s worth the the long term investment. Poor hiring practices can result in a mismatched workforce, leading to a decline in productivity, lost knowledge, increased turnover, increased time spent supervising, and higher per-hire recruitment costs.

To be absolutely clear: Cavalier and careless hiring burns through cashflow. When the cash runway is gone, the business is done.

To avoid this problem, establish a well-defined Talent Acquisition strategy. Start with an audit of how you currently hire people, even if that means piecing together a process from what you did in the past by habit. Clearly define the job requirements, conduct thorough interviews, and consider implementing assessments or skills tests to assess candidates’ abilities, but don’t overdo it. Involve multiple stakeholders in the hiring process to gain different perspectives and ensure a well-rounded evaluation, but there should always be a single hiring decision maker held accountable for preventing slow decision turnaround. Then, structure onboarding to flow seamlessly from the hire decision.

If you want to succeed as a business, prepare to compete in the marketplace for focus, effort, brainpower, and expertise. Once you develop a system around smooth recruitment, market yourself as an employer people you want as candidates easily envision themselves working for. Those businesses with the best candidate experience, culture, pay & benefits, and work environment win.

2. Ineffective Communication Channels

Communication breakdowns happen when communication standards aren’t addressed on day 1 of employment, and are left up to how each person prefers to communicate. Inadequate communication channels create more hr problems, and can hinder the flow of information, reduce transparency, lead to misunderstandings, and create a sense of disconnect among team members. People expend more energy on each little task as a result.

To overcome this problem, prioritize establishing clear and efficient communication channels within your organization. This means that you should ditch social media DMs, unannounced phone calls, and lengthy emails as your main means of doing business communication. Secure a business collaborative platform like Slack or Teams. These collaborative platforms integrate with other technologies the business will likely use, and creates a work ledger that tracks communication over time and can be recalled with a simple keyword search.

Encourage open dialogue and provide multiple avenues for employees to share ideas, ask questions, and provide feedback. Utilize digital tools and platforms to facilitate seamless communication across different teams and departments. Regularly assess the effectiveness of your communication channels and make necessary adjustments to improve collaboration and transparency.

3. Inadequate Performance Management

Effective performance programs are a hallmark for visionary leaders with businesses on growth trajectory. If performance expectations are unclear, employees may struggle to meet them, resulting in a decline in productivity and overall performance. Without proper performance measurements and processes in place, underperforming employees are given a runway, and high performers get frustrated and leave.

To prevent this problem, do the following.

  • Establish clear performance expectations for each role within your organization, with no more than a few KPIs per role to avoid mission drift, burnout, and micromanagement. Never evaluate employees based on “vanity metrics.”
  • Provide regular feedback to employees, both positive and constructive, to keep them motivated and help them improve. Make use of team sessions and frequent one on ones to keep their heads in the game.
  • Implement performance evaluation systems that enable ongoing discussions rather than relying solely on annual or biannual reviews. Less frequent pay dialogues are valuable for retention, but performance dialogues should be as frequently as your employees need guidance or goal recentering.
  • Offer training and development opportunities centered around gaps in skills your customers yearn for and are willing to pay for, delighting your employees in the process.

Focus on Accountability

To focus on accountability in performance measurement, employers can take the following steps:

  1. Set clear performance expectations around attainable, relevant, and time-bound goals.
  2. Establish Key Performance Indicators (KPIs) as those goals.
  3. Provide regular feedback and don’t let it go stale before taking action on that feedback.
  4. Conduct performance reviews with a focus on development in areas critical for the business.
  5. Implement performance improvement plans (PIPs) as a learning & development activity instead of a punitive judgement.
  6. Reward high performing managers.
  7. Provide pathways for future management in training opportunities that prepare them for the shift away from individual contributor mindset and to a growth and leading mindset.
  8. Foster open communication.
  9. Lead by example and show transparency and discipline in decision making. Make lucid how other organizational leaders are holding themselves and each other accountable and communicate it often.
  10. Influence employee outcomes by focusing on problem solving and matching potential and skill with the job tasks at hand.
  11. Continuously evaluate and refine the process. Regularly review and refine the performance measurement and management processes to ensure their effectiveness.

Holding individuals responsible for their performance cultivates a sense of ownership, fuels motivation towards goal attainment, and nurtures a culture of excellence.

Keeping Pace With Rapid Change

In the fast-paced business world, overlooking HR issues can have severe consequences. By addressing the three critical HR problems discussed in this article—poor hiring practices, ineffective communication channels, and inadequate performance management—you can safeguard your business from potential disasters. Remember, investing in your people and creating a positive work environment will not only attract top talent but also drive your business towards long-term success.

Take the necessary steps to strengthen your people strategy and practices moving your business along the HR Maturity Model, and watch your business flourish as a result.

Develop Your Company Culture with Intent.

With Poprouser, you don’t just get experts. You get people who understand business, who ask the right questions and set the right goals. A Chief People Officer on-demand.

Cody Bess