Detrimental practices in human resource management that cost you $

Save money, reduce turnover and improve morale by re-examining these commonly overlooked, but detrimental practices.

Someone said it's a lot cheaper to learn from the mistakes of others. The 15 HR practices that follow are in place at a surprising number of organizations--make sure yours isn't one of them.

1. Less money when on vacation

Some companies highlight vacation as earned time off, but then pay vacation time at the day rate. Therefore, employees who receive a shift differential (normally work the second or third shift) receive less money. The practice is legal--but is it worth the savings? Remember, vacation is a benefit.

2. Vacation pay after discharge

Most states do not view earned, unused vacation and personal time as time owed upon termination (exceptions include California). However, companies often pay for these hours if the employee resigns in good standing.

What is surprising is the number of companies that pay vacation and personal hours to employees who are discharged for cause. Why be so generous? Even the federal government allows employers not to extend COBRA benefits to employees who are fired for willful misconduct.

3. New employees need not apply

Organizations often brag about their practice of promoting from within. So does it make sense to prohibit certain groups from this benefit, for example, probationary employees, or those who have worked less than one year? Managers respond by explaining the negative impact a transfer will have on their departments. I question the signal the prohibition gives to existing employees. Would it be better for an employee to quit and apply for the other position?

4. Free work that isn't

What manager would say no to a non-exempt employee who is willing to work extra hours for free? Every manager should. The problem is that the employer is obligated by the federal Fair Labor Standards Act to pay for the time, even if overtime is not authorized. The employee's willingness to forgo pay does not exempt the employer from payment requirements.

5. Confusing discipline categories

Some companies try to help managers by categorizing infractions and then prescribing appropriate disciplinary action. What is intended to be helpful ends up causing more confusion. For example, one company defined infractions as critical, major, severe and minor. The company viewed sexual harassment as a critical offense with discharge prescribed for the first offense. In contrast, use of abusive language and breach of professional ethics were listed as severe offenses that warranted a written warning for the first offense. Both may be correct. However, depending on the facts, a sexual harassment case may justify only a written warning, and breach of professional ethics or use of abusive language could warrant more than a written warning. Unfortunately, company guidelines do not allow for such flexibility.

It's almost impossible to make the "art" of labor relations into an exact "science." There are too many variables to be considered. Simply classifying offenses and prescribing disciplinary action will only guarantee additional confusion.

6. Discipline that reduces morale

A practice of progressive discipline by infraction, instead of cumulative discipline regardless of infraction, can lead to morale problems. An employee could be suspended for absenteeism, and later receive a written warning (instead of discharge) for a different type of violation (work performance, for example). This practice places an undue burden on managers, and allows violators of company policies considerable latitude. Is it any wonder morale suffers when disciplinary action is not cumulative?

7. Get paid, then work

Many companies advance payment of paid time off--vacation, personal and sick time--before it is earned. These same companies say employees must repay time owed if they leave before earning the advanced time. What happens if the employee does not fully repay the debt? Many companies write off the time. Even if the employee repays the full amount, the company lent the money interest free.

8. Not a necessary cost

Unemployment compensation is often viewed as a "cost of doing business." It's like FICA tax--you just have to pay it. Not so! Even if your state awards a claimant payment, do not overlook the benefit of appealing the case by requesting a hearing--you do not necessarily need a lawyer to represent you.

9. Managers with hourly mind-set

Going from hourly to exempt status is like a leap of faith. Changing how you view your paycheck is a major mind stretch. It's no longer "What is my hourly rate" but "What is my salary?" Who cares how many "extra" hours you work--it comes with the territory. Failure to change mind-set will impede a new manager's success. Managers shouldn't record extra hours worked as "comp" time on their time cards, nor should managers be given a day off with pay after they accumulated eight of these "comp" hours. This practice sends a mixed signal.

10. Information leaks

It's an occupational hazard. If you work in HR, then you may be a suspect if "sensitive" information is leaked. HR staff might leak information; however, there is another way leaks could occur. If you use volunteers to file and do other work that enables them to see salaries and related information, add them to your "suspect" list.

11. Guaranteed extra work

COBRA entitles employees--under certain conditions--to continue to receive benefits. Noncompliance by employers can become very costly. Most employers process paperwork before an employee terminates. However, some employers handle all processing by mail. If you fall into the latter category, you will spend an inordinate amount of time tracking down eligible employees. You are also exposing yourself to legal difficulties if you fail to fulfill COBRA obligations. It is smarter to "COBRAize" employees before their last work day.

12. No bids for benefits

Complacency breeds expensive benefits. Especially if you have one agent of record for your group insurance plans. You might be pleasantly surprised at the amount of savings you'll realize by obtaining competitive bids. Competition has a way of lowering costs, or at least ensuring you are receiving the best buy possible.

13. Free benefits that cost you

Does this sound familiar? The insurance company offers a "free" benefit to your organization. They will do all the work; HR only has to distribute information and allow employees to pay for the benefit through payroll deduction.

I'm not against expanding benefits; however, even "free" benefits cost time and money. By distributing information, HR endorses the product. Who will answer employee questions if the vendor isn't responsive? What happens if the employee is dissatisfied with the service or product? Finally, there is a payroll cost. If you are offered a "free" benefit, you may want to request a processing fee from the insurance company for offering their service or product.

14. Keep the overpayment

It's common for organizations to reimburse employees for the underpayments. Would you believe some companies are reluctant to request payment if an employee was overpaid?

15. Requiring a doctor's note

Many organizations require a doctor's note to verify legitimacy of an illness if an employee is out for more than three work days. Some organizations require a doctor's note for every illness, or if they suspect an employee is abusing time. They believe they "got" the abuser. Think again.

A doctor's note policy may give the abuser a legitimate out if he or she can easily obtain a note. Also, you may be unfair to good attenders if you require a doctor's note for all illnesses. Using a doctor's note as part of a disciplinary process could also involve you in a discrimination complaint. Controlling absenteeism is not as simple as a "doctor's note."