The Cost of Doing Business – A Cautionary Tale
I recently read a white paper on the Global Risk Community site, published by TriNet , called “Top 5 Compliance Concerns for Small Businesses.” It’s a sobering document because of its legal implications for small businesses, which, according to the paper, represent 99.7% of all employer firms (SBA figures).
Here’s the problem, according to the laws of the country and the laws of states and other governing bodies, SMBs that have 10-500 employees are on the hook for the same kinds of HR compliance requirements as large companies with many more resources. It is unlikely that a company with only a few 10s of people can field a dedicated, experienced HR professional, and that means that 99.7% of employer firms are either at risk for huge penalties for non-compliance, or substantial fees to make sure that they are in compliance.
According to the paper, SMBs are at risk for (and these are only the top 5):
1) failure to take steps to avoid workplace litigation
2) failure to follow requirements of current benefit regulations and laws
3) lack of qualified internal guidance on massive amounts of HR policies and procedures
4) paperwork errors due to lack of qualified oversight
5) HR functions spread throughout the organization, no centralized group
HR legislation is one of the many challenges that your typical entrepreneur does not think about facing in his/her quest for creating something new. Companies such as TriNet can provide consulting services to help you contain risk, but the sheer amount of legislation regarding having, caring for, and disciplining employees brings up another opportunity for management of a growing firm: management cannot ignore what legislators are doing.
Public policy focus in groups such as chambers of commerce, the Association of Commerce and Industry, and the National Association of Women Business Owners helps SMBs have a larger voice—one that legislators listen to and respect.
Heed the warning of this white paper on HR issues, and look further to see how legislation is impacting other areas of your business and be aware that if you aren’t advocating for what you need, you may very well wind up finding yourself governed by what other advocates with other agendas thought would be good for you.