The Dangers of Running a Business Without Human Resources

When it comes to delegating tasks and developing roles in a firm, it is essential to consider the business effects of running the business without a human resource (HR) department or the guidance of an HR professional. Most companies either employ a small team dedicated to HR or have one individual to keep its elements running smoothly. Other businesses outsource the HR model and have an expert who deals with employee issues when they arise. In other cases, a business may designate a staff to handle HR duties in addition to their role. HR professionals manage a business’s most vital asset: the people. From compliance issues and regulations to engaging, developing, and hiring employees, HR is essential as it helps companies stay ahead of competitors in today’s talent market. This article will explain the dangers of running a business without HR by presenting the possibilities of litigation, risks of fines and non-compliance issues with specific government agencies, and low workforce morale and turnover issues. From a business view point, the absence of HR puts businesses at the possibility of violating several employment laws.?

Businesses that operate without an HR department risk the possibility of litigation. In most cases, the business may not be equipped to defend itself if faced with discrimination or harassment lawsuits. Even where fair pay, equal employment opportunity policy, or a positive business culture exists, the firm could be at risk due to an HR’s absence. Official data released from the Equal Employment Opportunity Commission (EEOC) revealed that company discrimination lawsuits frequently occur in the United States (EEOC, n.d.). The main role of the EEOC is to defend employees and eradicate obstacles to equal employment opportunities. Additional data shows how often workers claim discrimination founded on protected status or factors like disability, nationality, sex (including sexual harassment and pregnancy-related bias), age, race, color, religion, retaliation, and equal pay act (EEOC, n.d.). Companies charged with such cases risk serious financial consequences. A business can avoid these issues by hiring or outsourcing HR professionals to resolve the business setting matters.?

If there is a lack of HR and in cases of a toxic culture, employees file lawsuits on personal injuries, which are common occurrences. Usually, they are covered by compensation insurance. However, the presence of an HR guarantees a culture of employee safety as they respond to such issues and ensure that workers are extensively trained on safety to avert litigations caused by employer negligence (Valentino, Porta & Nelson, 2013). Workers can also sue for overtime, especially non-salaried ones. A lack of HR means that employees remain unmonitored; thus, challenges in paying overtime. As mentioned, when employees face discrimination, they may file charges, especially when treated fairly and if they are part of the protected class. If these employees suffer adverse actions like reduced hours, termination, or lack of promotion, they could file charges. In this case, HR takes the responsibility to prove that a particular action was undertaken for legitimate business reasons. A business that is unaware of the law should consider hiring HR to ensure that all company procedures comply. If a business is charged with wrongful termination, HR can prove the termination was lawful through accurate employee records of communications, performance, discipline, or warnings (Valentino, Porta & Nelson, 2013). Also, litigation on harassment takes many forms, like bullying or unfitting sexual comments from a supervisor. Victims may file a lawsuit in cases where employers do not take action after their initial complaint. Preventing such litigation begins with strict HR guidelines and policies specified in a worker’s handbook. If HR is non-existent, then it is clear such records are absent as well.?

A lack of HR in a company may violate the Department of Labor (DOL) laws. As a result, the business may attract fines due to non-compliance issues. The DOL has investigators located across the US who work under the Wage and Hour Division and are guided by the Fair Labor Standard Act. The investigators collect information on hours, wages, and other employment conditions to determine companies’ law compliance (DOL, n.d.). If they find violations, they may recommend changes to ensure the business complies. Willful DOL violations may be impeached criminally and attract fines of up to $10,000 (DOL, N.d.). The department prohibits the sale or shipment of products whose production violates overtime pay, minimum wage, or child labor.?

Additionally, businesses running without HR risk fines and non-compliance issues with the Occupational Safety and Health Administration (OSHA) as outlined in their guidelines. Companies that violate OSHA regulations in the US face several consequences: simple and definite to calculate, and others that are less measurable. Employers face lawsuits and legal costs to resolve complaints reported by injured employees, estates of workers killed due to infraction, and other potential penalties. The highest cost is associated with reputational damage. If a business is evaluated as lacking in its safety and health standards, partners and customers may see it negatively. OSHA cites six types of violations that companies should be aware of and can avoid (Hyland, 2018). The first one is “De Minimus,” which does not have a financial penalty as they do not affect safety or health. However, they are listed in the inspection file. The second violation is “other-than-seriously,” which does not impose a direct threat but is recognized as flaws under OSHA laws. These include poor storage of materials or poor recordkeeping. In the worst cases, this violation can attract a penalty of up to $12,500 per violation. The third violation category is “serious,” as the violations are viewed as a significant risk of injury or death. The fourth category is “willful violations,” and it is considered the most severe type as employers show careless or intentional disregard for safety. The penalty can go up to $500,000, or the employer can face a jail term (Hyland, 2018). The last two are “repeated violations” where OSHA cites a similar case within the same organization and “failure to abate” where a business does not solve the issue within the issued date.?

Under the US Immigration and Customs Enforcement law, the employer should verify the employment eligibility, identify all the people they employ, and document that data using the Employment Eligibility Verification Form I-9.?ICE prosecutes employers who knowledgeably break their laws and use the form and civil fines audits to ensure all companies comply with the law (ICE, n.d.). The entity has investigators who help deal with child labor, illegal wages, employee exploitation, and other offenses collateral to company enforcement. An HR department plays a role in ensuring that a business complies with ICE procedures. Homeland security works to protect the country against terrorists’ threats or attacks (“Homeland Security,” n.d.). The body can carry out investigations involving employers’ criminal activities, including money laundering, alien harboring, document fraud, worker exploitation, or alien smuggling by companies to prevent terror events. With an HR department, a business can carry out a thorough investigation of an individual before hiring them. Other government agencies that aim to protect US employees include the US Commission on Civil Rights, the US Merit Systems Protection Board, US Equal Opportunity Employment Commission (EEOC), and Employee Benefits Security Administration (ESBA). The violation of these organizations’ employment laws can cost a business a huge fine and several lawsuits, thus hindering its operations.?

The potential dangers of not having an HR in a business are linked to the HR department’s significant activities or professionals. These problems could have adverse impacts on the business at large and productivity and the well-being of employees. There are numerous cases whereby the absence of HR can be problematic. In most cases, employees reach out to HR about workplace bullying, violence, and harassment. If there is no HR, employees have no one to investigate and advise on the best possible solutions. As a result, employees become dissatisfied with the workplace environment, with some opting to quit. HR deals with questions regarding salaries, bonuses, and support and benefits enrollment, particularly matters relating to benefits like health insurance (Voorde & Beijer, 2014). A company that lacks HR is a ‘confused’ one as no one can handle such matters. Employees may be poached by other organizations or seek employment elsewhere, given that the workplace demotivates them.?

Human Resources plays a role in developing and promoting a business’s culture and ensuring that employees remain engaged with it. A common yet underestimated cause of employee turnover is a toxic business culture. Warrick (2017) explains that a toxic culture drives away new talent, sabotages motivation, and pushes the best employees aware. Businesses that exhibit toxic culture signs suffer retention problems. A company may have the best employees, but they leave the workplace setting as soon as they link their eroding motivation, mental health issues, and high-stress levels to the toxic culture.?

Suppose the HR professionals are absent from driving the workforce engagement efforts and hiring personnel who fit with the company culture; employees are likely to be demotivated. The business faces high competition levels with possible chances of losing to its rivalries. Having no HR leaves employees feeling demotivated and unsupported. Voorde and Beijer (2014) posited that a company’s HR fosters a collective workforce commitment level. These include talent selection, candidate hiring, development and training efforts, open communication, performance management systems, and employee participation. Demotivated employees tend to feel that their competencies are underused or their positions lack meaning; hence they may seek employment in other businesses. In some cases, bored or demotivated employees are tenser than overworked ones.?

From the above discussion, it is clear that companies that lack an HR risk employee turnover and loss of morale, litigation for cases like harassment, discrimination, and workplace injury, and fines and non-compliance of policies and laws of critical entities like DOL, OSHA, ICE, and Homeland Security. A business that lacks Human Resources may encounter challenges in maintaining or developing reliable connections with employees. The HR mends any existing communication gaps between employees and company management and offers workers the opportunity to report wrongdoings and express their frustrations with the leaders or the business in general. As a result, companies can resolve issues before employees consider any legal measures. The HR can also identify problems that do not comply with the specified guidelines of the mentioned organizations and ensure that the business complies with them to avoid penalties and, in worst cases, a company’s closure. Conclusively, the absence of any HR puts a business at risk of losing employees to competitors or violating several employment laws.?

References

Homeland Security, n.d. About DHS. Available at: https://www.dhs.gov/about-dhs. Accessed????8/23/2021.?

Hyland, C., 2018. The Consequences of Non-Compliance with OSHA Regulations. ?IMEC Technologies. Available at: https://imectechnologies.com/2018/08/24the-consequences-of-non-compliance-with-osha-regulations/#:~:text=to%20correct%20it.-Fines%20of%20up%20to%20%2412%2C934%20per%20violation%20are%20possible.possible%20jail%20time%20for%20individuals. Accessed 8/23/2021. ?

US Department of Labor (DOL), n.d. Enforcement. Available at: https://www.dol.gov/general/topic/youthlabor/enforcement. Accessed 8/23/2021.?

US Immigration and Customs Enforcement Law (ICE), n.d. Worksite Enforcement. Available at: https://www.ice.gov/worksite Accessed 9/15/2021.?

US the Equal Employment Opportunity Commission (EEOC), n.d. Filing a Charge of Discrimination. Available at https://www.eeoc.gov/filing-charge-discrimination. Accessed 9/15/2021.?

Valentino, C.M., Porta, J.J., & Nelson, R.H., 2013. A Review of the Pivotal Role of HR in Business Management from the 1980s to the Present. Employment Relations Today, 40(1), pp. 33-41. Doi:10.1002/ert.21397.?

Voorde, K. & Beijer, S., 2014. The role of employee HR attributions in the relationship between high-performance work systems and employee outcomes. Human Resource Management Journal, 25(1), pp. 62-78. Doi:10.1111/1748-8583.12062.?

Warrick, D., 2017. What leaders need to know about organizational culture. Business Horizons, 60(3), pp. 395-404. Doi:10.1016/j.bushor.2017.01.011.