Risks of ineffective HR policies and procedures
Do your Policies and Procedures need an Overhaul?
Most businesses have HR policies and procedures in place, but in most cases, they are seldom updated. Because Human Resources is a peripheral rather than a core function in many industries, vital policy and procedural updates can unintentionally be overlooked.
Small and medium-sized businesses, in particular, can fall into the trap of assuming that using generic policies and procedures is enough. Often in small companies, the business owner assumes the role of human resources together with their other responsibilities. This can expose the company to substantial penalty risks if HR policies are non-compliant with Fair Work legislation.
What defines sound policies and procedures?
HR policies and procedures are a system of principles and actions devised to be followed by both employees and management and to maintain operations within predetermined bounds. In human resources, the operations and boundaries relate to recruitment, labour law, maintaining a fair, transparent and safe working environment, as well as encouraging healthy employee engagement.
Policies determine the structure and principles, while procedures are the framework of steps to be followed to adhere to these principles. Although that sounds straightforward, it is more complicated if we consider that each business has its own unique requirements. Policies and procedures must also comply with territorial and national labour legislation.
HR policies and procedures must be compiled within predefined parameters to be valid and recognised if legally challenged. The most crucial factor is that it is written within the context of current labour law. It must also be created with:
- A clearly stated purpose
- A clear indication of who it applies to
- A table of terms and their definitions
- The responsible person or department
Essentials that must be covered:
- Recruitment processes
- Employment contacts
- Position descriptions
- Workplace safety
- Use of company equipment
- Grievance procedures
- Termination of employment
Each of these points need to be further elaborated on to cover issues like relationships between staff members, social media policies and other matters specific to the environment. All this information has to be clearly communicated to the workforce.
Why precision and specifics matter
At a glance, it can seem as if implementing a generic set of policies and procedures will suffice, but that is where businesses put themselves at risk. Specific nuances of each organisation must be included in HR policies and procedures because that defines what is expected of employees and the responsibilities of the company.
Ambiguity in policies and procedures around expectations, wording or responsibilities can land companies in trouble because staff can argue that internal guidelines are unclear. When and how policies and procedures are communicated also comes into play, as does the specific language used. Furthermore, ignorance of the law is not regarded as an adequate excuse in the event of harm or damage claims against a company.
Minimise risk exposure and improve employee engagement
Implementing well designed and documented policies and procedures improves productivity because it eliminates confusion and duality in the workplace. Employees understand how the business operates, what is expected from them, what their rights are, and what processes to follow. This can also protect the firm from legal risks because operations are practised within the framework of labour law.
Employees who work in an environment of uncertainty or where the lines of control are blurred are inclined to become less engaged. Abuse of power, intentional or unconscious bias and loss of productivity can flourish. Because there are no guidelines to follow, and each department conforms to the expectations of the line management, employees do not have channels to report deviance, fraud or grievances.
Legal action need not only come from staff but customers and the public as well. If an employee jeopardises another person, business or property of in their line of work, their employer can be held responsible. For example, if a driver injures or causes the death of someone on the road while driving on behalf of their employer, the company will face reparation.
Keep employees informed and updated
All new employees must be given a recent copy of the company’s policies and procedures in the form of an employee manual or handbook together with their employment contract. It is also essential that the policies and procedures are discussed with them when they receive their employment pack, or at the latest during induction.
For existing employees, it is vital to keep policies and procedures updated regularly, and that manuals and handbooks are reissued if there are changes. Policies and procedures can also be posted on an internal employee communication portal for employees to access at any time.
Assign responsibility and implement accountability
Compiling and maintaining policies and procedures must be assigned to a senior Human Resources executive who has extensive knowledge of the local labour market as well as territorial, national and international labour law if the company has global offices. HR policies and procedures must also be subjected to regular review, as well as external audit procedures to ensure compliance.
When companies do not have internal resources to fill this level of responsibility, outsourcing to professional HR consultants is the best option.