Of all the different things that go into running a small business, human resources is one of the most complex. People, unlike stock, assets and engagement metrics, don’t fit neatly into spreadsheets. They get sick, injured, or pregnant, they have problems with the way they’re being managed and sometimes chase their dreams to the other side of the country.
Although HR might not be all that easy to pin down, it’s extremely important to pay attention to. After all, payroll and benefits are going to make up a pretty large chunk of your overall expenses! Your employees can be one of your greatest assets, but only if they’re managed and protected properly. Here, I’ve put together a guide for your setting up and managing your business’s HR.
The first thing we need to establish is what human resources management is. In the simplest possible terms, this is anything that deals with your employees, from recruitment to management, to helping them further their careers and providing all the resources they need to work. Your head of HR will be in charge of who gets hired and who doesn’t, how and when performance reviews are carried out, developing, training and motivating employees, and ensuring their wellness and safety among other things. It goes without saying that your manager is going to have a lot of responsibility resting on their shoulders. The work they do is going to have a massive effect on the environment and culture at your workplace, and therefore how happy and productive your workers are in their positions. A lot of small business owners like to make their lives simpler by bringing in HR consultants or taking advantage of management software. However, there’s no way that you’re going to be able to dodge the issue of HR completely.
When you’re looking to manage your HR professionally, you’ll have to crunch through countless laws and regulations. This probably has something to do with why so many business owners are determined to put it off! While all these different factors can seem convoluted on the surface, they can be divided easily into three basic categories.
The first of these categories is employee files. To adhere to the various regulations you’ll be subject to, you need to have three specific files for each employee. The first is an I-9 file. This is a relatively simple form used by the US government to ensure that the employees at your business are legally allowed to work in the States. You’ll make your HR management so much simpler by keeping all of your I-9 files in one place, rather than under individual employee names. The next one you need to keep is an employee general file. Keeping this is more for your benefit than to avoid any issues with the law. It will hold all the documentation associated with the employee you may have collected during their time with your business. This can include reviews, resumes, training, disciplinary action, details about their payroll and so forth. Finally, you need to be keeping an employee medical file for each individual worker. This will contain information on disabilities, doctor’s notes, and any other relevant medical information you’re keeping about an employee. Because this information is private, it has to be kept separately and well protected.
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The next category you’ll need to deal with is your employee handbook. Keeping this kind of documentation is an absolute must. It will not only inform all of your workers as to what you expect of them, but also cover your own back in the case of a serious dispute. The way you organize and structure this handbook is entirely up to you. Some are very basic, whereas others are incredibly complex. However, there are certain general approaches which you should consider depending on the nature of your business.
One thing that a lot of businesses include in their handbooks is an NDNA. Businesses in many different industries have trade secrets to protect, and can protect themselves from all kinds of issues by having employees sign a non-disclosure agreement. Take some time to consider whether or not you need this, or may do in the future. Anti-discrimination policies are pretty much a given when it comes to employee handbooks in 2016. You’ll need to make sure your business is in-step with the Americans with Disabilities Act, and various other discrimination laws. Safety and security policies are another commonplace and potentially important part of the handbook. You have a responsibility to make sure your employees are safe at work, both physically and emotionally. You also need to ensure you’re compliant with the Occupational Safety and Health Administration, at the very least. It’s a good idea to include any company policies on extreme weather, CCTV, emergency situations, and related issues. You also need to outline what your employees are responsible for in terms of security. This could include locking doors, using strong passwords on computers, taking photos of certain areas of the premises, and reporting threatening or inappropriate behavior.
Your handbook should also have a section on the compensation and benefits which staff are entitled to. There are certain benefits which you’re required to offer your employees by law, and others which will be down to you and your upper management. Make sure everyone knows the proper procedure for receiving those benefits, and what is required of them in this process. If you exercise a tiered level of salaries or compensation, then explicitly state what it takes for them to get there. After that, make sure you’re giving enough information on vacation, other types of leave and work schedules. Absences, punctuality, vacations and so on all need to be a part of your company policy. Like a lot of small business owners, you might have plans that rely on telecommuting. If you’re going ahead with this, you need to clearly outline what is acceptable and what isn’t. Even if you’re intending to keep work schedules “flexible”, it’s very important to state your expectations.
Your standards of conduct are another important section which has to be in your employee handbook. Like most small business owners, you may not have thought that much about a dress code. However, if you’re going to implement one this is where it needs to be set out in the handbook. At the very least, all businesses should have certain rules about the use of company computers online, and any limitations on BYOD and personal devices within working hours. It’s 2016 now and cyber threats are always becoming more sophisticated and dangerous; don’t take a chance with them! Some general behaviour and ethics guidelines should also be a part of your employee handbook. Talk about the possible legal consequences of being careless, and make sure everyone’s aware of the repercussions for breaking your conduct standards.
After following the previous steps, your business will have the basic framework of a functional HR department. From there, it’s up to you to make sure everyone’s obeying the rules, and that you’re sticking to the responsibilities you have to your workforce. I’ll round this up with a few big mistakes you need to avoid when it comes to HR management.
First of all, make sure you’re not setting your standards too loosely when it comes to hiring. You must have the resources to do extensive background checks for the jobs that require it, and setting out clear job definitions which you can lean on if someone isn’t doing what’s expected of them.
Another big mistake is trying to manage your HR without any kind of performance documentation. This seems to be another symptom tied closely to modern start-ups. After all, when you’ve only got a handful of employees it won’t take too much out of you to make sure that everyone’s doing their job. However, the sooner you start monitoring and recording performance, the easier it will be to make the adjustment as your business starts to grow. These documents will show you who’s pulling their weight, and who’s helping the business through supererogation. Also, if you plan to fire anyone based on their performance, you’ll need the proper documentation to hand. If you don’t have it, you could end up the target of some seriously damaging legal action.
Finally, make sure you’re getting classification right if and when you need it. If your business goes to contractors and freelancers from time to time, then you need to make sure you’re using the correct classification to stay within the law. True, there are a lot of businesses which use freelancers simply to save themselves some money and hassle, and treat them as full-time employees. There are also a lot of businesses that get picked up by the IRS and other government agencies for this kind of conduct! Make sure you’re aware of the laws surrounding all of your workers, both permanent and temporary.
If the puzzle of HR was turning your brain to mush, then I hope this post has shed some light on the subject. When you’re taking care of your workers properly, there’s little else you have to worry about!