HR Best Practices for Small Businesses

Follow these tips so your business can grow.

By Alexandra Walsh

The challenges facing small business owners are fairly universal. Increase market share or customer base. Diminish costs and risk. Fulfill your mission or vision.

To achieve all these, small business owners must wear many hats. Whether you planned to be a human resources manager or not, you hold the HR responsibility.

There are some best practices small business owners can follow to navigate the maze of HR responsibility while still keeping company business the first priority.

Hire Good Talent

Small business owners often interview the wrong way. They may spread the interview process out over many days and take even longer to make a hiring decision.

Since the economy and job market is recovering, more jobs are available and the best candidates may be weighing other job offers. Instead of dragging out the hiring process, small businesses should interview all candidates for a position on the same day and ask them the same list of questions so they can easily compare and evaluate the applicants. The employer can then decide who gets the job later that day.

Small business owners must wear many hats. Whether you
planned to be a human resources manager or not, you hold the
HR responsibility.

Evaluate Employees

Many small companies hire and fire talent based on “gut feelings” and live to regret the decision. Employees discharged on a whim can sue for being fired without just cause or file a claim of discrimination if they are in a protected class.

Employment-related lawsuits are costly, and small business owners can do themselves a favor by crafting a list of job expectations for employees and putting a job performance evaluation plan in place. You can draft such documents and have a lawyer review them or have a consultant do the job.

Documentation is important, too. Documentation of any employee issues allows the employer to prove proper action was taken, involved employees were informed of the need to correct their behaviors, and a warning of potential additional disciplinary action up to termination was provided.

Have a Handbook

Issuing an employee handbook is a must. Your handbook serves two important purposes: it lets your employees know what you expect of them, and protects your business in case there is a dispute.

An employee handbook can be as simple or as complex as you want, but there are some general approaches, depending upon the nature of your business, you need to consider. According to the Small Business Administration, your handbook might include:

  • Non-disclosure agreements: Some industries will benefit from having employees sign non-disclosure agreements, but it isn’t applicable to all businesses. If you have trade secrets to protect, use it.
  • Anti-discrimination policies: If your business is in the United States, discuss how you will comply with the Americans With Disabilities Act, as well as with other employment discrimination laws.
  • Safety and security: Lay out your policies on how you will keep employees feeling safe at work, both physically and emotionally. U.S. businesses should discuss compliance with OSHA, as well as your own policies on bad weather, emergency situations, and video surveillance.
  • Compensation and benefits: Define the benefits you provide your employees, both those required by law and others that are unique to your business. Let them know how to receive the benefits, and what is required of them. Outline salary or compensation levels, and what it takes to get there.
  • Work schedules, vacation, and leave: Outline your business’ policy on schedules, absences, lateness, vacation and leave, absenteeism, special requests.
  • Standards of conduct: This might include dress code, behavior, online and computer use during work hours, use of mobile devices during work hours, ethics, legal aspects, and other similar topics depending on your business. Outline the repercussions of breaking the standards of conduct so employees see it in writing. This is necessary if issues arise later.
  • General employment Information: Your business will have its own policies and procedures apart from what the law requires. Clearly define what your policies are on work ethics, promotions, employee reviews, termination, referrals, employee records.

Be sure your employees have a copy of the employee handbook, they read it, and sign a statement acknowledging they received, read, and understand it. Put their signed statements in their personnel files. Make a copy of the handbook, either digital or paper, readily available to all employees for reference when they need it.

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Display Required Posters

Depending on the laws of the state your business is in, you may be required to post information in an easily accessible place. These vary from place to place, so you will want to work with a local government agency or legal counsel to make sure you have met the requirements. There are also companies that provide packets of posters depending upon your location to help make this process easier.

Give Feedback and Rewards

Many small business owners get so worried about bringing in money and paying bills they neglect to give on-the-spot feedback to workers, which could motivate employees and help the business grow. Often, the best feedback is simply verbal feedback on what the employees are doing, but small business owners should also set performance goals and award employees who meet them. These rewards could be a staff barbecue or tickets to a sporting event.

Ditch the Paper

Many small companies rely on paper-based systems to track time and attendance, manage schedules, and process key HR-related functions such as hiring and meshing new employees. Small companies should consider using technology-based solutions for these tasks so they can focus on growing their core business.

Keep Abreast of Laws and Regulations

Federal, state, and local government regulations, laws, and reporting requirements change constantly. Using cloud-based management technology can help small businesses keep up with the changing legal landscape.

Get a Good Attorney

Small businesses may rely on a general business counsel or even an attorney friend to manage employment law matters. Still, this may not be the best approach. Many aspects of employment law are complex, so a seasoned employment lawyer may be needed.

Mind the Compensation

Some small business employers classify employees as independent contractors to avoid having to cover them under workers’ compensation insurance and pay payroll taxes. If employees are misclassified, small businesses could end up having to pay back payroll taxes and benefit costs on top of fines and penalties.

Other employers may fail to properly pay employees for travel time and other compensable time, believing they will only be penalized for one employee if a claim is filed. However, violations of wage and hour laws can lead to costly fines and penalties that can apply to all employees who may not have been compensated correctly under the law.

Don’t Go It Alone

Successful small business owners know the importance of forming partnerships, and those that fail often try to do too much on their own. Partnering with payroll service bureaus, recruiting organizations, and technology vendors can help recruit, retain, manage, and grow a small or medium businesses’ workforce, while employees can concentrate on the job and focus on their own customers, products, and services.

Alexandra Walsh is the vice president of Association Vision, a Washington, D.C.–area communications company. She has extensive experience in management positions with a range of organizations.

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