As the owner or leader of a small business or organization, you know there are legal compliance issues that come into play as soon as you hire your very first staff person. Therefore, human resources (HR) functions must be performed.
However, having a strong HR program goes beyond compliance tasks to create a more engaged, productive team, which makes (and saves) the organization money.
You may intuitively sense that in order to move beyond surviving and start thriving, you need an HR system to pull the people from your organization together. But you may be unclear of what that looks like and are too busy with your day-to-day work to spend time figuring it out.
This article will cover how a solid HR program makes and saves you money, as well as outline some of the key elements required.
The Case for Solid HR
A good HR program ensures the organization attracts and retains the right people and that they are in the right roles, doing the right work, at the right time to produce the end results necessary for the organization to succeed.
Everything in HR can be linked back to this overarching goal. Here are some examples:
- If an employee is hired but doesn’t have the soft skills to effectively do the work, they aren’t in the right role.
- If an employee is being harassed by a coworker, the distraction will take them away from doing the work.
- If you aren’t paying people competitively, you won’t be able to keep the right people.
HR solves all these problems, which, if left unchecked, will cost your organization money or prevent you from making it. Without a comprehensive HR program in place, you’ll be reacting to your people issues rather than proactively managing them to meet organizational goals.
As a business owner myself, I know that running a small business requires lots of juggling to fit everything into a finite number of hours in a day. Putting an HR program in place doesn’t have to be complex or overly time-consuming. In fact, a good HR program should save you time.
All companies need HR. Larger companies’ HR programs may be elaborate, but don’t let that stop you. For example, most small organizations can’t afford to purchase an online performance evaluation system, but all of them can implement a simple paper-based format that will serve the same purpose.
Below are the basics of a solid HR program. If you put these in place while your organization is small, it will simply be a matter of tweaking as you grow and your needs change.
1. The Legal Stuff
Compliance with employment laws is the cost of doing business. Below are a few examples of the basics you must ensure are in place. Proactively complying with all local, state, and federal employment laws will save you time and expense down the road if you’re audited.
- Legally mandated postings properly displayed
- Employment applications and offer letters that protect the organization and do not put it at risk
- Employment files that contain items that are legally required or needed to defend your organization
- Processes and procedures to comply with safety regulations
2. Hiring Right
One of the keys to a thriving organization is to hire people who are well-suited to both the job and the company culture. Small organizations struggle with this because when short-staffed by just one or two people, it places a huge burden on operations.
If you only have 15 employees and you lose 2 of them, that’s a whopping 13% of your workforce. The pull is strong to quickly put someone–anyone–in the open position.
But taking the time to find the right person will save you headaches down the road. Hiring well is more of an art, not an exact science. Creating a good hiring process is an essential part of any HR program.
3. Communicating Clearly
Retaining great people requires attention to detail in the area of employee communication. Given the rushed pace of life, most of us tend to under-communicate.
Having a few key HR documents and processes in place will ensure employees are fully in the loop and that they understand your expectations, as well as the boundaries they shouldn’t cross. Below is a list of a few of the basics.
- Organizational structure chart
- Job descriptions
- Employee handbook
- Performance feedback documents
4. Staying Organized
HR requires tools that will make maintaining an HR structure easier and there are high- and low-tech options to fit even small budgets.
Small organizations are watching every dime, so use the tools you have already to keep your HR functions organized. For example, spreadsheets can be used for tracking employee information, creating checklists, and tracking employee performance.
Another tool for keeping a well-running HR program is to write HR standard operating procedures (SOPs). Documented procedures aren’t just for large organizations; they are very useful for small organizations to document processes that occur infrequently, making it easy to be consistent over time.
5. Rewarding Well
The ability to create and communicate a salary and benefits package that will attract and retain top people is foundational to the success of an organization. Even if you can’t offer the highest pay in your area, you must be able to articulate what you can offer to potential candidates as well as your existing team.
Having a simple structure that outlines your plan for how you’ll pay makes negotiating offers a breeze and ensures that you are compensating existing employees equitably.
Now that you understand the importance of having a solid HR foundation and have an outline of the essentials, what parts of a solid HR foundation will you put in place this year?
You can leave your answer in a comment below. By sharing your intention publicly, it creates higher accountability and increases the likelihood you’ll get it done!
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People Matters provides support to business owners and leaders in all areas of human resources.
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