Avoid Costly HR Mistakes To Keep Customers Happy

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The connection between HR and customer satisfaction is often underappreciated but the connection is real and poor HR practices or costly HR mistakes translate into higher costs and lower profits. HR departments often make mistakes that they could easily avoid by streamlining operations and running their HR departments properly. Here are some costly HR mistakes to avoid to ensure the success of your company.

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The link between HR management and customer satisfaction

A number of academic studies support the connection between HR management and customer satisfaction. SHRM (the society for HR management) is a professional organization focused on HR and they similarly support the link between good HR management and customer satisfaction that generates higher profits. I’ve also discussed the impact of employees on customer service, satisfaction, and a positive customer experience several times on this site.

Yet business owners and their managers continue to see employees as replaceable cogs in the business wheel without any direct impact on business performance. These businesses may survive with this attitude in the short run, but long-term success requires effective HR management that produces higher levels of employee involvement and identification with the brand that translates into higher levels of satisfaction, both employee and customer, that generate higher profitability and success.

How employees affect customer satisfaction

To help you understand how employees affect customer satisfaction, let’s take an example where customers find the performance lacking. For this example, I’ll use a service encounter, in this case, a hair salon (since I did significant research in this context), since services involve direct contact between the service provider and customer (client) that’s often termed the moment of truth due to the closeness achieved during the encounter. Of course, other types of businesses also find a link between costly HR mistakes and customer dissatisfaction, but this context most explicitly shows the linkage.

The service encounter starts with appointment making, which involves a customer calling or logging in to schedule an appointment. We could take a set farther back to look at an online search for customers looking for a new salon. A poorly designed website with outdated or missing information or one that produces a poor customer experience may end the potential encounter before it even starts. Possible mistakes at this point involve a phone that isn’t answered, a call that’s not returned, a wonky website that doesn’t work as expected (poor user experience), and rude appointment takers. We’ve now set up the service for failure before we even started. It’s a costly HR mistake when managers fail to understand the impact of front desk employees and those responsible for the website on a business’s bottom line.

OK, moving on, we now have the appointment. Customers disappointed by the early encounter with the website or front desk when making the appointment may choose to cancel their appointment or not show up; hurting your bottom line. Even if they show up for their appointment, you already have a strike against you; meaning you have an uphill battle to generate customer satisfaction. Plus, the earlier encounter might make the customer prone to unruliness so that they engage in behaviors (such as shouting, non-compliance, or other behaviors) that make the service encounter unpleasant for everyone including other customers and service providers. Why do you think the airline industry faced a huge increase in unruly passengers after YEARS of poor service?

A difficult customer makes the stylist unhappy, which s/he might take out on the next customers and, over time, the dissatisfaction becomes a common event that permeates the entire salon; resulting in poor customer satisfaction and poor performance.

Avoid costly HR mistakes

Recognizing the value of employees and their contribution to your bottom line is the first step in providing great customer service. Of course, that’s easier said than done, so here are some costly HR mistakes to avoid as you work toward improved customer satisfaction.

Taking on too many responsibilities

As a busy HR professional, it’s tempting to take on every task you can get your hands on. However, taking on too many responsibilities leads to more stress and less time for other important functions like recruiting and training employees. Moreover, many HR tasks are complex, with constantly changing rules and options. For instance, keeping up with changing governmental rules and regulations is really a full-time job. So are managing benefits like healthcare. Allowing HR professionals to specialize in one aspect of HR means they’re in a better position to offer concrete, current advice to employees; resulting in higher employee satisfaction. No one wants to fight with their insurance company because they didn’t understand the rules to get reimbursed.

It is vital that an HR team have enough resources and adequate training to focus solely on their primary job duties instead of trying to do everything themselves. This helps them create a better work environment which leads to the next point:

Stand out from the crowd

It is essential to work on differentiating your company to stand out of the pack. For example, focusing on employee wellness programs or developing a social media presence can create buzz about your company and allow it to stand out among other businesses that aren’t doing these things. In addition, this provides a better work environment for your employees and helps them feel more invested in the company.

Standing out from the crowd provides the best pool of candidates when you look toward recruiting new talent. And, everyone likes working with folks who bring new skills and ideas to the workplace. Managing recruiting includes providing valuable training opportunities and investing time into each new employee before fully transitioning them onto their work team. By doing this, it’s possible to retain top talent while also developing future leaders for the company.

Lack of communication with team members

When people don’t know what’s going on, it causes a lot of confusion and frustration. You must be open and transparent. For instance, I once worked for a company and we all knew one of our clients was getting ready to shutter its doors. They didn’t share this with current employees and you can’t hide certain facts forever. When employees discovered the looming closure, they acted in ways that seriously damaged the brand, making it impossible to recover to the point where closure wasn’t needed.

For instance, be direct by framing Labor Law Posters when communicating anything about compliance and employment policies for easy visibility.

Poor hiring practices

You spend a lot of time and money recruiting, interviewing, and training onboarding new employees only to have them quit or get fired soon after. This is because you’re not taking enough time in the hiring process, to ensure you’re getting the best people.

There are plenty of reasons why hiring the wrong person has an immediate negative impact on your company, including time wastage and resources allocated in training them.

Expecting people to just know

You’re not the only one who needs training. Asking your employees for input gives them an idea of how they can help you succeed as their leader. It also shows that you value their opinion, which builds trust in the relationship.

Lack of clarity about expectations

Employees need to know what they’re supposed to do, or else their job turns into a guessing game. Be specific and detailed in your communication with them so that there’s no confusion down the road.

Your employees want to know what you expect from them, especially in the hiring and review processes. You need to clearly lay out your expectations so that they understand how you want things done from day one.


To avoid the costly HR mistakes professionals make, ensure you educate yourself to avoid these common traps. To get started, take a look at the points this blog post speaks about and try to avoid them.

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