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Top HR Mistakes Made by Startups and How to Fix Them

Posted by Kanika Sinha

June 18, 2018

You know that to help your startup succeed, you have to have a competent, experienced, dedicated team.

Unfortunately, though, many startups slip up when it comes to human resources, hiring, training, developing and retaining a great team.

To help you avoid these all too common issues, we look at some top HR mistakes made by startups and how to fix them.

Mistake #1: Not Hiring a Human Resources Person

Whether you have a part-time, full-time or outsourced professional manage your HR, you need someone to do it.

Don’t let your human resources needs take a back seat to other issues. Having someone to handle your HR is good strategic strategy for your business.

Not only can they help you with many compliance issues, they can also help you hire, train and conduct new hire on-boarding in such a way that you are set up for success.

Mistake #2: Neglecting Employee Benefits

Don’t make the HR mistake of not hiring an HR person to create and manage your benefits administration.

One of the keys to keeping good employees is to offer them a competitive compensation and benefits package.

When you’re able to offer this, you’ll find more qualified people to join your team who are also more likely to stick around. 

Mistake #3: Taking Care of Payroll on the Fly

In the beginning days of your startup, you may think it’s easy to manage payroll, but that can’t be further from the truth.

If you make mistakes in payroll, you might end up owing the government money including IRS penalties.

Don’t make the mistake of thinking you can handle the complex payroll system. Let your HR team take care of your payroll and your compliance including taxes, workers compensation, unemployment insurance, tax payments and more. 

Mistake #4: Ignoring Employee Development

Employees today want to grow and learn with your company.

This includes ongoing training as well as performance management used to increase productivity and train employees.

As your business grows, you want to make sure your team grows right along with it. Help them get better at their jobs and acquire new skills, and your business reaps the benefits.

Having a solid HR department can help you take care of this.

Mistake #5: Not Creating an Employee Handbook

Many startups make the mistake of not creating an employee handbook with processes and policies inside.

This leaves your startup vulnerable to a myriad of problems.

An employee handbook helps you communicate work policies and procedures while reducing any employee misunderstandings.

You also want to ensure that all of your team members sign a form acknowledging they have read and understand your employee handbook and agree to all the policies outlined in it.

Mistake #6: Classifying Employees Incorrectly

Another common and very costly mistake is classifying your employees incorrectly.

You might be using several independent contractors in addition to on-staff employees. If there is any cross over, you need to make sure you change their classification to avoid fines.

Final Thoughts

The good news about these mistakes is that many companies before you have experienced them, written about them and posed solutions.

So, while all startups face very similar challenges, you don’t have to go down the rabbit hole because you now know how to avoid them.

Dig deep and decide what kind of culture you want to create. Make it your mission when it comes to your staff and frame all of your human resource goals around this mission.

If you do this, you’ll avoid these top HR mistakes, so you can build a strong startup built for success.

Are you a new startup ready to succeed? Are you looking to get your new business off the ground and watch it rise to success? We are here for you. We can help answer your questions and guide you through the process. Outsource your HR duties, finances, payroll and more to us. Contact Escalon today to get started.


Kanika Sinha
Kanika Sinha

Kanika is an enthusiastic content writer who craves to push the boundaries and explore uncharted territories. With her exceptional writing skills and in-depth knowledge of business-to-business dynamics, she creates compelling narratives that help businesses achieve tangible ROI. When not hunched over the keyboard, you can find her sweating it out in the gym, or indulging in a marathon of adorable movies with her young son.

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