Green Businesses, Mind Your Human Resources

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As a consultant to a number of start up companies and as a friend to many more talented, educated, otherwise stellar founders of companies, I have observed a significantly high number of missteps around human resource issues. Whether the result is a costly lawsuit or just hurt feelings, HR mistakes are easy to make and enormously costly, if only due to hundreds of hours of lost productivity.

OfficeWorkersI bring this up to Ecopreneurist readers because I feel it is particularly easy for there to be miscommunication between employees and employers in a mission-driven business.  In any startup, most employees make near-term financial sacrifices to be part of the team. In environmental startups, many employees join, at least in part, due to a desire to make a positive impact on the planet.

“We’re All In It For the Cause” (and other Signs of Potential Trouble)

Be careful when people feel they are sacrificing. One day, they might feel slighted over a promotion not received or a plum project assigned to someone else, and they might look back at the time they have worked and suddenly feel very resentful. Then, is the time you better be 100% compliant with all payroll, tax and employment laws, and if you haven’t been, it is too late (sorry).

In one small company, I saw a college graduate work very hard in her first job, primarily because she was dedicated to the social mission of the organization. It was a professional position requiring travel and independence–a hard job but one that would help her prove herself early and would contribute to a cause she deeply cared about.  When she developed some tension with the company owner, she demanded a raise, and when she didn’t get it, she hired a lawyer, who brought a successful suit that the young employee should not have been treated as having exempt status and was thus due over-time pay for the prior year of working very long hours. I know the owner of the business well, and know that the owner had no idea that the position should not have been treated as exempt. It was a mistake any of us could have made, but it was a very expensive lesson that could have been avoided by consultation with an employment lawyer or HR consultant.

Make Sure You Know Follow the Rules or Prepare to Pay

First and perhaps most obviously, the government takes payroll tax withholding and periodic IRSpayments very seriously. Make sure you do not have any contractors who should be employees.

Secondly, good intentions around issues like providing a safe working environment with equal opportunity won’t get you anywhere if you do not have proof.

I saw another company face a costly lawsuit when an employee felt she was harassed by another employee (off-site and after hours).  Unfortunately the complaining employee had been performing poorly for many months leading up to this point and was in the process of being counseled out.  Since the company was dragging out what should have been a quicker firing, the offended employee became very upset with management while still employed with the company, and she turned her upset into an accusation against the owner of the business that the company did not act quickly enough on her sexual harassment complaint.

And here’s the rub, this small company of highly mission-focused employees had NEVER held a sexual harassment training. That seemed like something that big companies do, not a small business that operated more like a non-profit organization. As a result, the owner had no real defense against a lawsuit over improper handling of a sexual harassment complaint and had to pay a settlement.

Know the Laws and Make Sure Employees Know Your Policies

Nau Store in PortlandOwning or managing a green startup is fun. When your team is humming along and everyone is working for a sustainable and successful business, you’ll feel you have the best job on earth. I am sure you have hundreds of things to do on any given day, but do yourself a favor and consult with an employment lawyer or HR consultant, or at least use one of the “create your own HR manual” software packages that are available. If you never know what a good investment this is (because you’ve skirted trouble in this area), you can count yourself lucky.

But, don’t take my word for it, let’s hear from readers… I bet many of you have seen entrepreneurs struggle with unfortunate human resource quagmires. Do tell!

Photo Credits: Me, U.S. Census Bureau, Public Information Office (PIO), M. T. Harmon of the US Office of Public Affairs

About the Author

A strategy and marketing consultant, Leah enjoys highlighting the efforts of, and providing information for, social entrepreneurs. In her consulting practice, she works with cause-related businesses and enlightened investors--to see people succeed at doing good for the planet and local communities while doing good for themselves. Leah has a B.S. in business from UC Berkeley and an MBA and Certificate of Public Management from Stanford University. More information at