Mitigating Employment Risk

The two times that employment risk is most evident is when hiring employees and when firing them… plus all the times in between. You may get a slight laugh from this observation but I do not mean to make light of the situation. You, as an employer, are always at risk when dealing with employees from the time you hire them until the time they leave.

In fact, your company and all its agents have an obligation to ensure a safe work place, to take reasonable steps to guarantee a harassment free environment and treat all employees in a fair and unbiased manner. Failure in any of these capacities exposes you and your company to potentially devastating, legal action. It is not a small task and prudent companies take every precaution to minimize or eliminate their ever present employment risks.

Mitigating Employment Risk
The name of the game in HR is consistency. Everyone in the same position and under the same circumstances must be treated the same. Deviate from this simple norm and some employee will take notice and, when it serves their interests, remind you and the appropriate company or governmental authorities of the fact. The first sentence of this article aside, here are the areas where inconsistency is most notable and can be the most problematic:

The hiring process is very much an indicator of how well the entire HR process works within a company. At a minimum, the selection process should be formalized, involve multiple hiring agents and entail a variety of pre-hire screening criteria. These fundamentals will not guarantee every employee is a “keeper” but it will eliminate the worst applicants. In addition, it generates a level playing field in case of any EEOC complaints.

Similarly, compensation and benefits packages should be as nearly identical as possible for similar positions. Many companies stretch these limits to hire employees away from competitors but a compelling case can be made that staying within the competitive compensation rates is far better in the long run.

Employee onboarding is a relatively complicated process that seeks to familiarize the employee with the company while gathering all the necessary paperwork to satisfy government auditors. Onboarding sets the tone for the rest of the new hire’s employment experience. The process should occur outside of normal store activities (including training). It should be formalized with a checklist that is signed by both the new hire and the onboarding manager at every step of the process. Most importantly, the company handbook should be delivered to the new hire at this time as it details their job description, duties and all other company policies.

A thorough, documented training regimen is essential for a variety of reasons. Improperly or inadequately trained employees can be a danger to themselves and those around them, fostering diminished staff morale and impairing customer service. More importantly, lack of proper training also precludes any sort of performance management counseling. To minimize issues, all employees in the same position should receive the same training. In addition, all training should be formalized, scheduled as a separate activity and documented when complete.

Performance Management
Aligning the goals of your employees with the goals of the company is the surest way to obtain superior results. The key to accomplishing this goal and mitigating employee dissatisfaction is a well-documented performance management system. Identifying deliverable and measurable goals will satisfy the parties on both sides of the table. In the event that the goals are reached, valid reasons can be established for preferring one employee over another when it comes to promotions and pay increases.

On the opposite note, poor performance or behavioral issues can be addressed with the same performance management process. This situation is especially noteworthy for mitigating employment risk because many employees, when counseled, look for any discrepancies to bolster their case of bias or impartiality. The counseling process should be exactly followed as detailed in the company handbook and it is another area where a “second set of eyes’ is invaluable. It is far better to take the extra time at the beginning and get some additional advice than to attempt damage control after the fact.

Adherence to Published Policies

As noted in the title, consistency is not a dirty word in the HR world. In fact, it is far better to err on the side of caution and bear with an unpleasant situation for a little longer than to act precipitously and crate a much larger HR issue. Policies are published for this very reason. They are intended as an objective framework for dealing with complicated and subjective situations. Ignoring them or applying them arbitrarily is just asking for trouble. Train your managers properly and then insist, upon pain of termination, to exactly follow your HR policies and procedures.

The HRIS and PEO Advantage

An employee can make an unsubstantiated accusation of harassment or bias at any time. A formalized system that takes them through the entire process from hiring to termination is an excellent first step in mitigating employment risk. However, good intentions are not enough. The proper implementation of that system is the next necessary step.

Managers can be well-trained and have years of experience but, sometimes, it only takes a busy or unusual day to throw them off their game. In these situations, an HRIS or PEOs can be invaluable in helping guide them through a complicated counseling session or a termination. By simply reminding the manager of the necessary steps and paperwork required, an automated software system or an experienced third party vendor can significantly diminish the amount of employment risk.

About the Author:

Carolyn Sokol writes about issues that may affect small businesses such as human resources, hr management software, and HRIS systems. She is a founder of and contributor to, both of which help match businesses to the right HR or payroll service provider for their particular needs. Her background is in marketing and communications, employee education and training, development of policies and procedures and the ongoing delivery of outstanding customer service.