The HR Health Check

When business leaders talk about risk, they usually think about cash flow, cybersecurity, or compliance.
But the truth is, your biggest risks often sit inside your own workforce and most of them are preventable with proactive HR practices.

A well-run HR function isn’t just about compliance; it’s about protection, performance, and profitability.

Use this quick HR Health Check to see how your people operations measure up and where hidden risks might be costing you money, time, and peace of mind.

1. Are your exempt vs. non-exempt classifications current and documented?

Misclassifications are one of the top causes of wage & hour lawsuits, and many companies never revisit them after hiring their first few employees.

Action step: Review all job descriptions annually and confirm they meet the FLSA exemption criteria for salary level, duties, and consistency across states.

2. Can you confidently say your handbook reflects and complies with the laws in every state you operate in?

Multi-state compliance is a landmine: paid leave, pay transparency, and termination rules all differ by jurisdiction.

Action step: Audit your handbook for each state you employ people in and document updates, it’s one of the simplest ways to prevent costly missteps.

3️. Do you know your voluntary turnover rate and the real reason people are leaving?

If exit data isn’t being tracked and analyzed, you’re guessing at retention strategy instead of managing it.

Action step: Track voluntary turnover quarterly and use exit interviews or surveys to identify common trends before they snowball.

4. Are managers documenting performance consistently across teams?

Lack of documentation is the #1 factor that turns a simple termination into a legal or reputational risk.

Action step: Require managers to log performance discussions, warnings, and coaching in a consistent system; not sticky notes or email threads.

5️. Have your pay practices been benchmarked for equity and competitiveness in the past year?

Pay compression and outdated salary bands quietly drive turnover and DEI gaps, even in small teams.

Action step: Compare your compensation data against market benchmarks at least once a year and review internal equity across gender and tenure.

6. Does every new hire receive a structured onboarding experience beyond Day 1 paperwork?

Unstructured onboarding correlates with up to 2x higher turnover in the first six months.

Action step: Map out a 30-60-90 day onboarding plan that includes training, mentorship, and regular check-ins.

7. Are you tracking employee sentiment or engagement with any data?

Pulse surveys or feedback loops can uncover early warning signs before productivity dips.

Action step: Use quick, anonymous pulse surveys to monitor engagement. It’s one of the easiest retention tools you can deploy.

8️. Could you produce proof of harassment prevention training or signed policy acknowledgments?

In audits or litigation, “we thought they knew the policy” doesn’t hold up; documentation does.

Action step: Store digital acknowledgments and training certificates in your HRIS or document management system.

9️. Are your HR systems integrated (payroll, timekeeping, ATS, benefits, performance)?

Disconnected systems increase errors, duplicate work, and make compliance reporting nearly impossible.

Action step: Evaluate whether your HR tech stack communicates effectively. Integrations save time and reduce audit exposure.

10. Is HR seen as a strategic partner tied to business metrics, instead of a compliance function?

The fastest-growing SMBs treat HR like Finance: a data-driven pillar that drives retention, culture, and profitability.

Action step: Involve your HR leader (or fractional HR partner) in forecasting, budgeting, and strategy meetings — not just employee relations.

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✅ Scoring Guide

· 8–10 “Yes” answers: You’re ahead of the curve. Maintain with an annual HR audit.

· 5–7 “Yes” answers: Moderate risk. Tighten gaps before they compound with growth.

· Under 5 “Yes” answers: You’re likely leaving money, time, and peace of mind on the table.

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📅 Get Your HR Health Debrief

If this checklist raised some red flags — don’t worry, you’re not alone.
Most growing businesses outpace their HR infrastructure long before realizing it.

Book your HR Consultation below — we’ll review your answers, identify your top 2–3 quick wins, and build a roadmap to make your people operations as strong as your business goals.