Managing Employees: 5 Scary Small-Business Mistakes

Tonight when all the trick-or-treaters are out, trying to scare you into coughing up some candy (good candy, please, none of those Bit o’ Honey or Necco Wafers), I’ll know what really scares small business owners: employees.

Yes, your employees can make or break your business, but battling zombies can be easier than managing people.

When ‘Giving Your All’ Gets You Nowhere

Case in point: I received an email recently from an employee who wanted to know how to turn down a “promotion” that meant doing two jobs without a pay, title, or bonus increase. She wrote:

“This [small business] spreads their people thinner than they can handle without any monetary compensation. They gave the excuse that they are a small company and employees need to be willing to wear several hats. They gave me a pep talk saying that I have such potential and this will help me get a promotion one day. That may be true, but I’ll still have all the added stress of doing two jobs for one paycheck.”

This mentality — “we’re small so everyone needs to give 110 percent!” — is very common. The problem is that small business owners have far more to gain (and a lot more at stake). When profits go up, their paychecks go up.

That’s rarely the case for their employees.

Small business owners are willing to make sacrifices for the success of the company, and they assume their employees should be just as willing to make sacrifices. It’s kind of like how some parents think their kids are so fabulous that they’re boggled when people don’t line up around the block to babysit the little darlings.

5 Super-Scary Assumptions

Look closer and you’ll see other ways this mentality can haunt a small business. Here are my five favorite examples:

1. You expect employees to treat you like family. “We’re so small, we’re all like family.” That sounds like a super idea — until you realize that most families have a crazy uncle locked up in the basement.

You may think that by treating your employees “like family” they will want to pitch in and work to their deaths because it’s for the “family.” Your employees don’t want to be treated like family. They want paychecks and bonuses and clear boundary lines. Not midnight phone calls, mandatory attendance at parties, and invitations to dinner.

2. You think “last in, first out” is a sound HR policy. When times get tough, you may have to let an employee go. This is, without a doubt, one of the most painful and difficult things you’ll ever do. To make it less painful, owners tend to favor loyal long-term employees rather than looking at which team members are most valuable to the business. Keep the best employees, not the ones with the longest tenure.

3. You think employment law doesn’t apply to you. It’s true that there are a lot of laws that don’t kick in until you reach 50 employees. But there are plenty that kick in with 12 and even more that kick in with your first hire. Plenty of small businesses have been completely destroyed by a lawsuit when an employer thought the law didn’t apply because the company was too small or because the owner assumed employees would never “betray” the company by suing. Know the law and follow it.

4. You’re a meal ticket for your friends and family. Yes, you trust your friends and family, so it makes sense to hire them, right? Well, only if they are the right people for the job. Remember, you can fire your brother from the company, but your mother may write you out of her will for it. And your best friend in high school? I’m sure she’s awesome for conversation, but is she really who should be running your marketing plans? Hire based on skill, and you’ll have fewer problems in the long run.

5. You wait too long to fire problem employees. Firing is difficult and terrible for everyone involved. But unless you’ve got a unionized workforce (doubtful) your employees are at-will, which means you can fire them any time you’d like, as long as you don’t do it for illegal reasons (like being pregnant, being disabled, or because of race or gender).

If you have a problem employee, document, warn, and then fire. If you’ve got any concerns, check with your lawyer (yes, you need one), but don’t hang onto a bad employee forever, hoping she’ll get fed up and quit.

Building and running a small business is enough work without giving yourself an endless supply of HR nightmares. Follow these suggestions, and you’ll exorcise those business demons — before they exorcise you.