The Beginner’s Guide for Human Resources in Small Business

In many ways, HR (or “human resources“) is more than “just another department” of your organization. For small businesses in particular, it literally acts as the backbone of what you’re trying to build and how you’re going to get there. HR professionals are the hardworking men and women who deal with the hiring, administration and training of personnel – what could be more important to the future of a small business than its workforce?

HR departments will become particularly valuable as your organization continues to grow and expand. However, it’s essential to understand that not all approaches to implementing HR are created equally. Every business is a little bit different, which is why there can not be a “one size fits all” approach to what you’re supposed to do. Only by taking the time to learn what works for you (and, more importantly, what doesn’t) will you be able to create that essential “spine” you need to carry your business into the next few years and beyond.

Beginning Your HR Journey

If the human resources department is the spine of your business, the employee handbook is the spine of the human resources department. This is more than just a guide about what employees should or should not do – it lays the groundwork for your entire organization and protects both you and your employees in a wide range of situations.

An employee handbook with elements like a written attendance policy is actually something that one study estimates between 6 and 42% of employers around the world don’t actually have. Everything that matters – from attendance to vacation policies to dress codes and more – needs to be outlined clearly and concisely in this document to help keep everyone on the same page and legally protected.

Speaking of “legally protected,” also remember that your HR team is your first line of defense when it comes to staying up-to-date with all current laws and regulations that you need to follow by industry. Federal, state and even local government regulations, laws and reporting requirements often change as frequently as the weather. Giving your HR team access to a cloud-based human capital management solution can help make sure you’re staying current on everything that could potentially get you in trouble later on.

It’s equally important to understand how your human resources department plays a role in the company culture you’re establishing. In addition to hiring, HR professionals are often in charge of things like the following:

    • Employee development and training
    • Employee motivation
    • Performance reviews and ongoing management
    • Benefits packages
    • Communication between employees and their superiors or other management professionals
    • Safety and wellness and more

All of this directly contributes to your company culture. In many ways, your HR department will set the tone for what it is like to work for your business. They need to approach all of these things from two distinct angles – both in terms of making sure that something like safety and wellness concerns are addressed (meaning that employees have a safe place to work, no exceptions) AND in terms of creating the type of strong workplace environment that people actually want to be a part of.

If you focus on only the former and not the latter, your company culture will suffer. As the probability of job turnover in a business with poor company culture is an amazing 48.4%, this is not something you want to ignore.

Small Business HR Mistakes To Avoid

When discussing something as important as HR to a small business, it is just as important to know what not to do as it is to learn about the areas you should be focusing on. Remember that one of the chief responsibilities of your HR team will be hiring, and that one study estimates a single bad hire could cost a business more than $50,000. To say that the stakes are high is something of an understatement.

Consult with your HR team and make sure that the actual hiring process isn’t overly hasty for your organization. Proper job descriptions, thorough tenant screening and an organic interview process are all important – and they all take time to master. Remember that the old saying of “anything worth doing is worth doing right” applies in this situation. It is better to let a position sit unfilled for a few more days or weeks than it is to quickly fill it with someone who isn’t a good fit for the part.

Likewise, work with your HR team to make sure that all of your employees are properly classified. There is a very important difference between an “employee” and a “contractor” – especially in the eyes of the Internal Revenue Service. What an employee does, how you pay them and their relationship with your organization all play a role in determining which role they fall into. Take the time to get this right in particular or you could find yourself in hot water come tax season.

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