The Case For Early Human Resources

Thoughts October 18, 2021 By: Steph Barlow

Can you remember the worst job you ever had? Were the co-workers toxic? Were the teams in shambles trying to find resources? Was the work-life balance painfully non-existent? Everything seemed wonderful in the interview, but ultimately the “fit” just wasn’t there. Now what?

At one point or another, we’ve all been there.

As an award-winning HR professional, and the Director of People and Culture at Iversoft, this knowledge breaks my heart. Why? Because no one is benefitting from a poor hiring choice, or poor organizational management. Not the employee, not their company, and certainly not the bottom line.

HR creates policies and procedures to mitigate all those awful “worst job” scenarios, and so much more. They handle hiring and on-boarding, but they also play key roles in retention, growth, and risk mitigation essentials for the health of your company. That’s why it’s so important to invest in Human Resources as early a possible.

It’s unfortunate that in start-ups and small companies, Human Resources is often considered a luxury, especially with new recruitment technologies making jobs more accessible than ever. Take Application Tracking Systems (ATS) as an example, which enhance and expedite HR’s ability to source and hire candidates. This increased efficiency means Human Resources can expand their impact to areas like retention and strategic growth.

Human Resources does so much more than hiring new employees. They are a vital department, necessary for streamlined success, talent development, and risk mitigation for companies of any scale and level.

Human Resources is About Hiring the Right Person

We’ve all experienced working at a company with a ‘burn-and-churn” mindset. We’ve worked ourselves into the ground reaching for unrealistic performance expectations because we believe we’re replaceable. And sure, people under pressure get things done for a while, but it’s an incredibly short sighted solution.

In reality, the resources needed to properly vet a hire are scarce, time is limited, and the company needed this role filled yesterday.

Unfortunately, rushing the hiring process to get the first person with a pulse at the desk is not setting them (or the company) up for success. When the new hire faces struggles that reduce productivity, the fastest solution may be to replace them with a better fit. Sadly, this situation only repeats the original circumstances and the downward spiral continues. According to Forbes, the U.S Department of Labour puts the cost of a bad hire at 30% of the annual salary of that position. Why then, do so many companies operate with this mindset?

For many companies caught in this vicious cycle, it simply feels productive to get someone into a role as quickly as possible because you need them now. Yet bad fits, misaligned skill sets, poor training or on-boarding, high turnover and lowered morale are all consequences of rushing the initial hiring process. Ultimately, the most costly thing about the hiring process is the risk of hiring the wrong person.

It is HR departments that can save a company from falling into this critically flawed system. A team (even one individual) dedicated to the hiring process means stopping this cycle before it starts.

Quality hiring is expensive and time consuming — but it’s always more cost effective than hiring the wrong person. And it should be! As a department, our job is to view the company holistically and strategically design opportunities to meet our unique needs. Human Resources begin the process of hiring long before a job is posted to an online portal. We start by working with your team to make sure they have a solid understanding of the role you are looking to fill. We make recommendations when crafting the job descriptions to hone in on the most vital skills.

Once the job is posted, we carefully vet applicants and design assessments to confirm their skills. Interviews and follow-ups need to be conducted with diligence. Once a decision is made and an offer accepted, Human Resources has a vested interest in supporting that new hire. HR ensures the employee is getting the tools they need to succeed, like proper on-boarding.

Now imagine your company doesn’t have a dedicated HR person. No one is solely committed to applicant vetting, follow-ups, scheduling interviews, or organizing offer letters. Without HR, these crucial responsibilities fall onto other members of your team who must find time to complete them in their already busy schedules. They’ll likely be done ad-hoc. Quality will suffer as a result.

This is, in part, because hiring is a skill. When the task is given to a staffer who is unfamiliar or inexperienced with hiring, you’re taking bigger risks. Your team might hire a person who “looks good” on paper, or “feels right” in an interview. With these tactics, you’ll be leaving a lot to chance.

Instead of “going with your gut”, know what the personality and value set you’re looking for. Skills are vital to hiring, but so is personality. It is easier to train a hire on a new skill, than to coach a poor attitude. Even if the new hire has all the necessary qualifications for the company, they may have misaligned values that result in an unhappy employee. Unhappy employees can lower performance, department productivity, and company morale. In all cases, the bottom line will be affected.

Human Resources Supports Diverse and Equitable Hiring Practices

Remember when we talked about how difficult it is to bring on a new employee when your company has limited resources to devote to hiring? Without staff or time, cutting corners by relying on your gut instincts becomes attractive. When stressed, under-resourced companies make speedy, unchecked decisions; they risk falling prey to unconscious biases, nepotism, or charismatic personalities that lack the necessary job skills.

The danger of falling victim to one’s unconscious biases may be easy to miss, but the effects are hard to deny. Hiring decisions based on a “cultural fit” may feel “safe”, but they risk creating less diverse, and therefore less effective and innovative teams.

According to Deloitte, diverse companies have 2.3 times greater cash flow per employee. A BGC study found that diverse management teams had increased revenue by nearly 20% compared to similar teams with less diversity. Garter found a 30% performance improvement among high-diversity environments.

As an HR leader, I know that diversity in hiring is a company’s greatest strength. No matter the size of your business the benefits of diverse hiring are hard to ignore. If you want to take advantage of improved productivity, performance, and revenue, then you need diverse and equitable hiring practices.

Candidates with different backgrounds and professional experiences bring valuable perspectives to their role. Investing in candidates with transferable skills, unique backgrounds, and fresh perspectives is a great way to create dynamic teams capable of greater innovation.

With so many benefits to diversity in hiring, it is a true shame that discriminatory practices still exist in workplaces. Thankfully, there are laws in place to protect companies from falling into discriminatory hiring practices. The laws that protect against hiring bias are strict, and it’s the responsibility of HR to develop policies that comply with them.

With dedicated HR resources, your company can generate hiring practices with diversity and inclusion in mind, while ensuring those practices protect against unintended bias.

Hiring a diverse workforce is important, but once you invest the time and resources into finding a strong group of individuals, the job is far from over. Your new hires need to feel that they belong in their roles, both professionally and interpersonally. HR’s role is to support those hires, providing them with processes and tools needed to do their jobs effectively. This includes ensuring they feel heard, understood, and valued. In short, now that you’ve got your team members, your next challenge is to keep them.

Human Resources Maintains Talent Retention and Development

What makes someone stay at their job? Is it the salary? The culture? The work-life balance? The growth potential? The truth is, their reasons for staying are as varied and unique as the hires themselves. If the job someone is in doesn’t give them the balance they’re looking for, they’ll be motivated to keep their options open.

HR staffers are a key access point between your company and its employees. They can help make sure your employees’ personal and professional needs are being met in a way that keeps them happy and motivated.

Happy, engaged employees create healthy, successful companies. Engaged employees have higher productivity, increase profitability, report higher loyalty, and have lower absenteeism.

When an employee begins to feel unhappy, their eyes wander to opportunities with other companies where the grass looks greener.

Gallup recently reported that 36% of employees are engaged at their job, while 51% are not. Unengaged employees are uninspired in their positions and are on the lookout for better opportunities.

But far worse than unengaged employees who may choose to leave, are those who stay while spreading this dissatisfaction to others. These actively disengaged hires see little future with the company and their attitudes can be infectious.

Even when an unengaged hire is replaced, there is risk with termination processes, and ensuring quality knowledge transfer to the new hire. Proper knowledge transfer means starting a new hire from a position of strength. Without it, you risk lower performance, frustration, and the possibility of the situation repeating itself, leading to costly turnover.

Now, if your company has an HR department (or an HR agency or consultant), you have a team allocated to addressing these issues before they begin. Human Resources is responsible for monitoring employee engagement and professional development.

A key factor that should never be overlooked for any new hire is onboarding. Companies with quality onboarding see a 50% increase in new hire productivity and can improve employee retention by up to 82%. Properly onboarding a new hire ensures quality training, adequate knowledge transfer, and fosters growth alongside retention. Retention doesn’t mean just keeping a hire in their role, it means offering room for professional growth and advancement.

An employee that chooses to stay with the company, sees a future with the company. HR practices like employee check-ins, surveys, and performance reviews give staff the opportunity to share their insights, and explore how they see themselves growing with the company. Human Resources also analyzes employee performance to identify top performers. We want to ensure top performers stay engaged with their work and grow in productive and meaningful ways.

For start-ups and small companies these aspects of HR are incredibly important. Employees at small companies are more likely to be responsible for a variety of tasks. Losing just one employee due to poor performance, poor training, or active disengagement takes an even larger toll on a company’s morale and bottom line. When it comes to employee retention, engagement, and growth, Human Resources is one of the biggest risk mitigators your company can have.

Human Resources is Your Company’s Centre for Risk Mitigation

Hiring is expensive. Training is expensive. But far more expensive than both combined are poor compliance practices. When resources are limited, Human Resources can seem like a “nice-to-have”, especially when it comes to compliance. But for companies with little room for error, poor compliance practices pose some of the biggest financial risks.

All companies, especially boutique and upstart companies, must mitigate financial risk wherever possible. This means adequate HR.

HR handles critical policy work vital for proper compliance. It is HR’s responsibility to ensure your company is compliant with all employee labor regulations. This includes health and safety policies, labour codes, and regulations such as ESA, OHSA, OHRC*, and AODA*. These regulations are subject to ongoing changes, and can generate fines when not adhered to. Fines can affect companies who unknowingly violate new rules or restrictions. Thankfully, HR teams are required to stay on top of any updates to employee work regulations to mitigate risks of fines for non-compliance.

Another area of concern is termination. Employee termination is never fun. The last thing any company of any size wants is to terminate an employee they’ve spent time and resources to vet, hire, and train. What’s worse than terminating an employee? Finding out it has been conducted without following proper processes.

Fines related to wrongful dismissal can be disastrous. Penalties for contravention, as an example, carry maximum fines of$100,0000 for an individual and even prison time.

Thankfully, quality HR teams understand the complex, delicate issue of dismissals. They are able to avoid or mediate any legal pitfalls such as constructive dismissal, and help you and the dismissed party navigate termination administration. Without an HR team, the burdens of these duties will fall on you, or members of your staff who aren’t trained in these details, increasing the risk of costly error.

The bottom line is, HR is vital to reducing risks during hiring and dismissal, saving money, strengthening company reputation, and ensuring good standing with labour bodies.

Conclusion

Human resources is not a “nice-to-have” for large scale companies. It is a vital department, necessary for streamlined success, growth, and risk mitigation for companies of any scale and level.

Regardless of the age or size of your organization, it will benefit from a dedicated HR person, department, or even third party agency. Human resources assess your company’s unique hiring needs, ensuring roles are created based on actual needs and are properly defined. They lay the groundwork for fair and equitable hiring practices to invite the most qualified candidates. They are responsible for engagement and retention of happy, productive employees. And they mitigate costly risks, confirming proper processes for dismissal.

HR ensures the healthy ecosystem of your company functions, and that it grows in the right directions, leaving you to focus on what you do best: running your business.

In short: you need HR.

*In Ontario