Episode 85: This Tiny HR Mistake Could Burn Your Whole Business Down
Episode Description:
In this episode of Don’t Waste the Chaos, Kerri Roberts pulls back the curtain on one of the most overlooked and potentially business-ending - blind spots for leaders: failing to audit your HR. Whether you think HR is just “paperwork” or you’re not even sure what it’s supposed to do, this conversation will change how you see your people operations forever. From compliance gaps that could trigger lawsuits to cultural missteps that drive away your best talent, Kerri walks you through a simple, DIY HR audit framework that helps you identify risks, build trust, and protect your bottom line. Packed with real-world examples, actionable questions, and a reality check on what “good HR” really means, this episode is your wake-up call before it’s too late.
Tune into hear:
Discover the #1 HR blind spot that quietly drains profits and puts your company at legal risk.
Get a practical, DIY HR audit checklist you can run through in under 10 minutes to uncover your gaps.
Learn how strong HR strategy fuels culture, retention, and trust - not just compliance.
Hear real client stories that prove why a proactive HR approach saves money and headaches.
Understand the difference between tactical HR tasks and strategic HR leadership (and why both matter).
Mentioned in this Episode:
Referenced Resources in the Episode Free DIY HR Audit Checklist - https://www.saltandlightadvisors.com/...
Contact Kerri Roberts for an HR Audit - hi@saltandlightadvisors.com
Salt & Light Advisors Website - https://www.saltandlightadvisors.com/
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Full Transcript
Kerri Roberts (00:01.646)
Welcome back to Don't Waste the Chaos. I'm pumped to get into this with you today because this is a question that I get asked often, and that is, how do I know if my HR is actually performing in my business? Or really, I have people say, I don't even really know what HR is supposed to be, and I get it. Have you ever had the nagging feeling that something's off? You feel like maybe it's a policy gap. You feel like it's an employee issue brewing, or you don't know if you're compliant.
That's the voice of risk talking to you and ignoring it could cost you in ways that you cannot afford. So I want to talk today about how to conduct an HR audit for your business. It's like a business health checkup for your people ops. I want to give you this simple DIY audit that you can use yourself to uncover blind spots. And I want to share with you how you're going to change the game for your team's trust and your own peace of mind if you walk through it. But first,
Why is HR there and therefore an HR audit non-negotiable? And this isn't just how I feel because I'm an HR person. I've just seen this work over and over and over again. I've worked in organizations from 45 employees to over 20,000 employees and human resources is the bedrock. Now, good human resources, right? I've seen people run HR like it's an admin suite and those tasks need to be done, but they're not.
like the strategic piece of it. Yes, they are mission critical, things need to get processed, but where HR really makes an impact is strategy. So we're gonna do a little bit of a mix today between our tactical HR stuff and then our strategic HR stuff. So the first reason why HR and therefore an HR audit is non-negotiable is because of compliance and risk reduction. This is the boring stuff that you have to have to have a sustainable business.
If you think this is boring and your employees think it's boring, what's gonna be really boring is sitting around being unemployed. This stuff matters. I'm talking documentation, policies, potentially overlooked legal requirements. These can all lead to fines, lawsuits, and reputation damage. So compliance and risk reduction, it is a necessary evil. We all have to have it. You need it. The second reason why this matters is because of culture and retention.
Kerri Roberts (02:22.668)
I hear a lot of organizations say I'm having a hard time hiring and I'm having a hard time retaining. Audits reveal where employee experience is being neglected. This could be a lack of recognition. This could be no growth plans. There's a lot of reasons why employees become disengaged and disenchanted. This is going to help you find those areas. And then the third is your peace of mind. If you are a small business owner, if you are a leader, you know these things cause stress.
but you don't necessarily know what to do with them. So knowing where you stand is going to help you sleep at night instead of wondering what if, what if my top employee leaves tomorrow and nobody else knows what she does for a living? Here's a quick stat for you. 70 % of small businesses face employee-related legal claims at some point, and the average cost is around $125,000. And almost all of it, not all of it, but almost all of it is preventable.
Your team deserves clarity and you deserve to not feel like HR is a moving target that you can't keep up with and don't even really know what it is. Let's talk about the ripple effect of a strong HR function. Here's what it does for employees. They have clear policies and this reduces confusion. They have structured feedback processes and this boosts engagement. And they have benefits and development opportunities and this builds.
loyalty. So what does this actually look like? It looks like a clear job posting, a clear job description, clear performance reviews, regular communication, understanding on how they can make more money. It is just clear and clear as kind. So as a leader, what are the benefits here? Predictable systems mean fewer fire drills. I hate how people call HR people the firefighters.
It shouldn't and doesn't have to be that way. Sure, every once in a while something weird is going to happen and we're going to have to address it. A sexual harassment claim, somebody going rogue, like yeah, that's going to happen. I've literally had to stop a woman who had a end of life bag under her desk. Wild things are going to happen, I get that. But in general, we can avoid the HR firefighting, the people firefighting. You'll also have better decision making with clear data.
Kerri Roberts (04:44.768)
And you can shift from that reactive to proactive management. I have seen clients come to me and say, I don't even know really what I need. Can you help me? This is the first indicator to me. We need to do an HR audit. Let me not guess. And I'm also going to hear you tell me what matters to you. And while that is important, and I'm going to take notes on that, I'm going to do an HR audit to see what the actual shortcomings. I'm going to do a gap analysis. I'm going to do a risk analysis. I'm going to do a financial analysis.
And that's going to help me see what exactly needs to be tackled. I had a client at one point. They were a small law firm, three locations, around 50 employees. And they were like, you know, we think we're doing pretty good, but we're getting big enough. We want to make sure we're doing the right thing. Came in, did an HR audit. We implemented an HR payroll software. We implemented regular communication from the leadership team. We implemented an employee engagement survey.
We implemented a newsletter, which I know seems random, but the employees loved it. And we built it off of what they wanted based on what we saw in the engagement data. We did job descriptions. We created career ladders for every single role. We changed some job titles around so that way we had promotion opportunities. We did a compensation data study. I did all of that in about six months. And then after that, I recommended that we hire an HR payroll person.
who can implement this and execute on it internally. For the next six months after we hired that person, I stayed on as a strategic oversight. We essentially backed our contract down to minimal. I had a one call a month with this individual. And then at the end of that six months, I bounced and it was perfect. I'm so excited for them. They've got their systems in place and they're running like a well-oiled machine. So let me give you a little value drop right here. I'm going to show you how complex
that this is in your mind, but how simple. We can actually push the easy button. How simple this actually is. So let me run you through some questions. And I will say at the end of this, if you want this written out for us to send it to you, you can go to assaultmindadvisors.com forward slash HR audit, and you can find these questions, download them, and join our weekly newsletter, I guess for lack of a better term, where we put this content out to you all of the time. So.
Kerri Roberts (07:05.454)
Let's start with step one, which is the compliance basics. I'm not gonna take you through every single question that I ask because this would be a three hour long podcast, but I'm gonna run you through some of the major ones. So let's talk employee files. Are they complete? Are they current? And are they secure? When I say are they complete, do we have resumes in there? Do you know you're supposed to keep resumes from every single person who applies for a job for around seven years from a record management, a legal records management potential or perspective?
Most organizations aren't doing that right there. And I'm not going to be like, no. I'm just going to say, all right, I'm going to mark that down, and we're going to get that rectified, and I'm going to help you put a system in place. So do we have their resume? And then if we did an interview, do we have the interview questions that we asked them? Do we have any interview notes? And then if we ended up advancing them, do we have a job offer? Do we have their background screening results? And then if we have a job offer, do we have a job description?
What did the job posting look like? And then what was their new hire onboarding checklist? Is that automated? Is that paper? Do we have all of that? And then what usually comes along with that, of course, would be your I-9, your tax paperwork, your direct deposit, your emergency contact. I recommend you have an HR payroll system. I can recommend some of those to you, some ones that I trust and have actually worked with. They're all pretty good platforms. Customer service sucks for some of them, and I'm sure you had those experiences.
getting a great customer service rep from an HR payroll technology perspective is clutch. But do we have all of this? Is it current? When's the last time that we had employees go in the system and audit their emergency contact and just take a look at all their data? And is it secure? Where's it saved? Who has access? Do we have it backed up anywhere? What does it look like? That's one piece, y'all, inside of compliance.
I'm going to dig into all of this with my clients, but this is something that you can do yourself. Just ask a few questions. Next is, you have required posters? I know these seem ridiculous that this is still a thing, but like federal law and state law says that we have things posted. Do you have the required posters posted? And also, are they displayed where employees can find them? Could be electronic. Let's just make sure it's systematic. And are those up to date? They usually change every year, every three years.
Kerri Roberts (09:27.736)
We need to make sure they're up to date. Let's talk policies inside of compliance. Do they match current laws, both federal and state? And do they match your actual practices? And this is where a ton of people are like, yeah, we got a handbook. And I'm like, OK. I start going through the handbook and I'm like, OK. So I don't see where they actually track their paid time off. Where is that tracked? yeah, we do X, and Z. OK, well, that's contradictory to your handbook. Or you've got an employee that presents and they need time off.
Even if you're under 50 employees, maybe you don't qualify for FMLA, you're not under that act you're not required to because you're not big enough, but how do you handle that if someone comes to you and they're needing a maternity leave or a short-term disability? What policies do you offer around that? So that's the compliance basics. I'm gonna go over your employee files, I'm gonna go over your required posters and your legal requirements, and then your policies. So let's move on to step two, which is your hiring and your onboarding.
I love this piece because this starts getting into that employee experience. We're gonna look at job descriptions. Are they current? Does every single one have them? Are they aligned with role expectations? Do they include the legal jargon? What about offer letters? Are these legally compliant? Are they clear on terms? Do they help people want to say yes and where are they stored? And then let's talk onboarding checklist. Does it set up new hires for success in the first 90 days?
Do you have an onboarding checklist? All of the things that need to be done. And if you do, do you have responsible parties for each one of those? And do you have a checks and balances that they've been completed? And does it go beyond the first day and the person who executes your payroll? Because it should. It should include their training protocols and all that good stuff. Their one-on-one meetings with leaders in the organization, how they're going to get cross-trained, how they're implemented into communication, all of the good stuff. So.
That is your hiring and onboarding. Let's jump into pay and benefits. I'm going to find out, there pay equity? Are there any unexplained pay gaps? What does everyone make? How do you determine that? How do you determine if there's performance reviews and what raises can look like? As far as benefits go, what do you offer? Do employees understand those? Do employees utilize those? What are your utilization rates? When's the last time you talked to your insurance broker? If you don't know your insurance broker's name,
Kerri Roberts (11:53.123)
They suck, you should find another one. I can help you with that. And then payroll compliance. Are deductions and classifications correct? Exempt versus non-exempt. 1099 versus actual employee. There's a lot that goes into all of that. I'm just gonna find out how you do it. The next step is around employee engagement and development. Do you have a feedback loop? Do you do surveys? Employee satisfaction surveys, employee engagement surveys. Do you conduct one-on-ones?
Are there growth or training opportunities? Is your organization flat? A lot of small organizations like pride themselves on being flat, but do you know that most employees want to know what a potential growth path looks like? So do you have that? What does training look like? Are there certifications and licenses that have to be had for your roles and how are those executed? How do you make sure that people are staying compliant with those and how is that information tracked? And then is recognition consistent and meaningful?
How do you recognize employees? And I love it when a business owner will be like, I'm really good at that. We make sure we do it. OK, how is it? Because you're a human too. And I'm telling you, if it's not written down and it's not a process, you're probably not quite as systematic as you think with everyone. Maybe with those high performers, you're really great about rewarding them. But what about your work-er-bees that stay behind the scenes? How do you remember to reward and recognize them? And then lastly,
offboarding? Is there an exit process? Do you have a checklist around that? Is it consistent? Is it compliant? Do you capture feedback to improve retention? Do you do exit interviews or anything like that? And then do you have a checklist as far as ensuring that company property and data is secured after their departure? So that's just a quick run through again, salt and light advisors.com forward slash HR audit. And we'll give that to you. That's certainly not the whole HR audit that we do, but that's a really great.
for you to get started today. And if you as the business owner, if you're like, ugh, I don't know the answer to a lot of that, sit down with your people, schedule a one-on-one. And if you don't want to do it, schedule it with me and we'll come in and do it for you. But these need to be answered and you need to make sure that your HR person and your payroll or your office admin has standard operating procedures for all of these should they leave your organization, should they have a baby, should they have back surgery.
Kerri Roberts (14:14.508)
We need to know how to do all this because we're not just going to say, well, we're not going to hire or fire anybody. And we're not going to have any personnel issues while the person who's handling this is gone. That's unrealistic. So we need a reality check. Here are some of the common comments that I get from business owners and CEOs when I'm running through this process. And yes, I want to do it with the business owner. And then if there's questions that aren't answered there, I will go to your payroll, HR, office manager, admin, whatever that looks like. But a lot of them say,
I didn't know we were missing that. I thought someone was probably handling that. I have no idea where to even find this information. I hear all of that. The checklist is the starting line, but it's not the finish line. When I do an audit, I'm looking at the 10x detail that I just walked through. And then I create an action plan that actually gets implemented. So what we do is a gap analysis of all of those things plus way more.
The process usually, I usually do around three one hour meetings if we're doing it virtually, or if I'm able to come on site, I usually do a few hour meeting and we run through the whole thing. And then from that, I take all of that data, I do a gap analysis and I tier it a few different ways. What are your like insurance and compliance risks? What are your financial risks? And then what are your people or culture risks? And then I walk through all of those and then I help prioritize to you.
what I think you should address first, but I mean, like the business owners are gonna speak into it. And some of it's low hanging fruit, like, okay, we're 50 % of the way here, we just need you to push across the finish line. And then we work together to determine, are you gonna take this over in-house and if so, who and do they have the capacity and is it in their job description? Or are we going to take some of these tasks on as my firm? And how will this look as far as timeline, reporting out, so on and so forth.
I'd love to invite you to do a full HR audit with my business. I work with organizations that have anywhere from three people to I've got organizations that have around three to four thousand people. And of course they look different, but in general it's literally just digging in. If you want to go beyond the basics and have us do the heavy lifting like uncovering the gaps and fixing them and giving you the peace of mind that you deserve.
Kerri Roberts (16:36.239)
Let's get you booked for an HR audit and you're gonna walk away with clear prioritized action plans that help set your business up to thrive. Now I'm gonna be completely candid on this. HR audits start at $2,750. That's the investment. Now larger organizations, more complex, multi-state, things like that, they go up from there. But in general, I'm just going to get an overview. Do you have it, yes or no? I'm not gonna actually do a handbook audit inside of it. I'm not going to actually read all of your policies.
Do you have the policies, yes or no? Do you have performance reviews, yes or no? Now, I'm gonna have completely different opinions if I think they're effective or not, and that's gonna come in my report back to you that says, like, here's what I think you need to do next, but here's what I think you should do to start. Go to saltandlightadvisors.com, forward slash HR audit, and you can grab that, I'm gonna call it 10 minute health check, and here's the reason why I'm gonna say it's so short. That's because,
I literally just want you to read through it and be like, do I even know where to find this stuff and do we have it? It's just gonna be like a yes or no. It's not gonna take that long for you to go through that. It's a simple tool. It's gonna give you a quick snapshot of where you're strong and what gaps that you have. And if you want to take it further, that's where we can work together and get your people operations running like a well-oiled machine, compliant, efficient, and with a culture that your team actually wants to be a part of. Remember, good HR doesn't just protect your business.
It propels it. And I have seen so many organizations take this for granted and it blows my mind. I was on somebody else's podcast the other day and they were like, okay, as a small business owner, I just feel like some of this is overkill. You can think that until you get sued or you can think that until you have a hard time recruiting or you can think that until you have a hard time retaining or you can think that until your insurance audits you and tells you there's a gap. You can think that or you can just know HR, human resources.
human capital, people, operations, all, whatever you want to call it to make it feel sexier, it matters. It's a key part of your business strategy. You would not just assume that a random person off the street could file your business taxes.
Kerri Roberts (18:53.667)
You would not assume a random person off the street is going to understand what deductions look like in payroll. I don't know why we assume that just a random person off the street or, you know, your aunt who is looking for a part-time gig can run this piece because it takes a little bit more strategy to that. It doesn't hurt my feelings. I just know you're gonna call when you need it and that's what we're here for. Just know we've got a wait list as far as my clients are concerned. But I operate in the state of Missouri.
This is a huge, huge business. If you take tech firms out, people who do what I do, it's over $6 million worth of revenue in the state of Missouri alone. That's taking out HR payroll technology. And let's talk about that for a minute. When it comes to HR payroll tech, don't they do your HR for you? I mean, they help you automate it. And some of them offer PEOs, by the way, which is a co-employer.
you get less autonomy, but maybe that's where you're at as an organization, you want to be in a PEO and feel like that's off of you and they handle your workers' comp and some things like that. I would argue you can do it in-house. You just need to know what you're doing. And maybe that's doing an audit like this and then just getting a little more strategic, documenting your processes, implementing the right technology, and then moving forward from there. This is not a huge...
line item as far as expense to get this going, but your payroll and your benefits, your people, are usually your largest line item. If they're not, I don't know that you're paying them appropriately, or maybe you're just making a bank and you don't have a lot of people to have to do it, and like congratulations, but most businesses aren't like that. It takes people to run the ship, right? People are steering the ship. People are keeping people from jumping overboard.
If you turn too fast and you leave a wake in the back and somebody falls off, someone's grabbing them, like it takes a team. It takes your leaders and it usually takes some kind of office admin that has some experience or somebody outsourced that's got some strategic oversight to make sure that that office admin understands what they're doing and keeps their focus because they're helping you run the business from day to day. I get it. This feels like chaos if you've never learned any of this, but I would argue with you.
Kerri Roberts (21:13.583)
When I have a business owner come to me and they're like, I'm kind of embarrassed because I don't have any of this, don't be embarrassed. You're really good at construction or law or med spas or whatever it is. You are passionate about that. You are a practitioner in that area, but no one ever taught you this. And even I have my MBA and a number of other accreditations, but most organizations don't teach these pieces and there's a lot of nuance to it because it's people. So this chaos is work.
but it's work that's worth your time and will reap you a ton of benefits and rewards, and I mean financially, but then also just your sleep at night if you put the work in. So don't waste the chaos on this. Embrace it. Until next time.
