Six Common HR Mistakes Small Businesses Make
  1. Blog
  2. Day to Day HR
  3. Six Common HR Mistakes Small Businesses Make

At citrus HR, we support thousands of small businesses every month through their HR headaches, and often notice trends around the type of questions we’re asked; what we’ve spotted is there are Six common HR mistakes small businesses make. These mistakes fall under the following categories:

  • Performance
  • Probation
  • Disciplinaries
  • Absence
  • Redundancies
  • TUPE

Before we explore the mistakes themselves, it’s worth pointing out that all small businesses need to be on top of their HR, and having the right HR support can help them to:

  • Avoid inefficiencies – if you aren’t used to the practical application of HR policies and processes, they can take much longer and be less effective without the right advice;
  • Reduce reputational risk – poor HR management can impact your reputation as an employer and therefore your ability to recruit and retain staff;
  • Avoid tribunals – tribunals can be very expensive; if you lose there is compensation to pay, but even if you win mounting a legal defence to a claim is likely to be costly.


Not managing performance issues effectively

We are regularly contacted by employers who have reached the end of their tether with someone who is not performing to the required level. This has often been going on for many months and lots of informal conversations have taken place, but a formal procedure hasn’t been followed.

Unfortunately, this can often be a barrier to a speedy termination (even where that’s probably the best thing for both parties). Having a Capability Procedure (and using it properly) will give the individual every opportunity to improve, whilst also providing all the evidence you will need to ensure a fair and relatively risk-free dismissal if they are unable to improve sufficiently. It’s not a quick process to follow, so it’s best to start as soon as you see performance issues.

If you’re struggling with an underperforming member of the team, take a look at our blog which explains the performance management process, and what you need to consider.


Not making full use of probationary periods

Probation periods are a great way of making sure that you’ve made the right decision in recruitment.  Not only that, they can be a great way to help you to engage, develop and onboard new starters so that they are up and running quickly, and feeling truly part of the team in no time.

However, one of the common mistakes we come across is that managers and business owners don’t have time for regular probation meetings, and aren’t able to feedback to new staff, or they pass probation and then want to performance manage or let people go shortly after.

Proper use of a probation period can avoid all of these headaches for you, and improve engagement within your team.

Find out more about probation periods and a comprehensive guide on how to use them here.


Avoiding disciplinaries until it’s too late

Taking disciplinary action isn’t easy, and certainly doesn’t come naturally to everyone.  This is particularly true in small businesses, where people tend to know each other well, or owners and managers often aren’t comfortable with confrontation, so avoid doing anything about seemingly minor issues.

However, not dealing with smaller issues is the same as condoning the behaviour and even insignificant issues can lead to bigger problems if not dealt with.

We see this a lot. Communication has been poor around the subject, and everything comes to a head. Unfortunately, that’s when you open yourself up to unfair dismissal claims.

It’s important to act on concerns quickly, and document everything. This could be as simple as having a brief informal conversation to explain that a particular action is not acceptable in the workplace.

Repeated offences and more serious issues will require formal action and this should always be actioned in a timely manner. It’s difficult running a small business, and we know that disciplinaries create extra work.  However, if you don’t act quickly, it can really count against you, particularly if you ever need to go to an Employment Tribunal.

Find out more about disciplinary action, and when and how to take it, in our blog.


Not managing absence formally

It can happen so quickly. You only have one or two team members, so you have an informal absence procedure. Then someone exploits it, or you start to recognise trends but can’t prove it. Or perhaps someone’s attendance levels are so bad, you want to dismiss them, but haven’t taken any formal action.

This happens to so many businesses, which is why we always recommend formally recording absences (your HR software should do this easily for you). Not only does having a formal process protect you as a business, it also highlights issues and gives your team an opportunity to improve their absence.

Our blog tackles how to manage absence effectively.


Following the law when it comes to redundancies

Redundancy is never a nice process to go through, but it’s a process that, if followed correctly, is a relatively risk-free method of reducing headcount.  We often see issues where employers don’t follow the process correctly, which can make a dismissal automatically unfair.

Common mistakes include:

  • Not holding any consultation meetings.
  • Making decisions on who will be made redundant before the process has commenced.
  • Not ‘pooling’ employees with similar roles and using fair ‘selection criteria’.
  • Not following the correct timescales for the consultation process, or notice of meetings.
  • Not allowing representation at meetings.
  • Not documenting the process appropriately in writing (letters, meeting notes, etc.).

Find out more about the redundancy process in our comprehensive guide.


Not understanding TUPE properly

TUPE (‘Transfer of Undertakings (Protection of Employment Regulations)’) can be challenging for small businesses. Effectively though, it is still just a process, and if you follow it properly you won’t come unstuck.

Where we see challenges, is when a business doesn’t follow that process – often because they didn’t understand it and haven’t looked for advice on it.

So, if you’re consider transferring all, or part of the business to a new employer, or one of your services transfers to a new provider (for example, when another company takes over the contract for office cleaning), be sure you’re seeking TUPE advice to be sure you’re taking all the steps you need to.

Find out the TUPE basics here.


To Summarise

It’s easy to get things wrong, but it also easy to get things right. If you act without delay, do a little bit of research and arm yourself with the appropriate HR support you’ll find that you can deal with most issues effectively. Remember that the initial aim of HR policies and rules is to help to make your employees more effective and efficient in their roles; dismissal is and should be, a last resort.

Overall, it pays to have someone who can provide good advice when you need it.

You might also want to read these articles

Six Common HR Mistakes Small Businesses Make

Take the stress out of HR with help from our friendly experts and easy to use HR software.
Find out more


  • Get free employment law alerts

    Keep up to date with employment law changes that might affect your business.