Top 10 HR Tips For Small Businesses

Rising employee strength calls for more professional advice on matters related to human resources for small businesses. If you don’t have an in-house HR department, then you can outsource your requirements to expert HR companies who are technically sound and professional to handle all your day-to-day HR responsibilities.

A small business entity usually starts out more informally, with the owner constantly switching gears between acting as an HR to being the floor manager and finally the owner of the business. Gradually, as the business grows and expands, you would need to boost your employee strength. In this case, multitasking no longer becomes a feasible option for the owner entrepreneur.

Rising employee strength calls for more professional advice on matters related to human resources for small businesses. So, let us check out these ten effective HR tips for small business owners and entrepreneurs.

1. Understand and comply with the employment law

One of the most crucial hr tips for small business owners and entrepreneurs is that they should thoroughly understand and comply with the rules and regulation laid down by the employment law or the labour law to avoid any hassles and to ensure a smooth employee recruitment process.

The law nearly covers each aspect of recruiting, including terminating and retaining employees. It also includes other features such as safety, benefits and compensation. There are many ways to get accustomed to the employment law. You can consider hiring an expert to help you with the legal aspect of hiring, or you can seek different resources to familiarise your team with the legal HR practices.

2. Hire the right people

The next crucial hr tips for small business owners is to get the right people on board. After all, your business will be as good as the kind of people you hire. Your business may have a great concept and show great potential, but it all boils down to how efficiently your employees can put your vision to practice. After all, they are the behind-the-scenes workforce that will run the company forward.

If you do not hire the right employees or if you hire someone inappropriately, you will end up wasting your resources in trying to make them fit right into your scheme of things, which will eat up your time and attention. Being a small entity, this will hugely impact your business. Start with a detailed job description to engage the right candidates during the hiring process. And jot down your key requirements — this will help you find your most suitable candidate.

3. Offer a competitive pay

It is crucial to find out what kind of pay would fit the job position and be competitive enough to hire new employees. After you find the appropriate pay, stick to it, customise it or add perks and benefits to attract the most deserved employees.

Good pay is one of the most effective human resource tips to hire and engage with the right talent for your business. After all, pay and benefits are the factors that keep the employees motivated to perform for the company.

You can provide benefits such as health insurance, retirement plans and parental leaves to make the offer more lucrative and persuade talented candidates to become a part of your business. Plus, you need to stay updated with the changing market and keep improving your pay benefits.

4. Proper documentation of employee files

Proper employee documentation is a must during the orientation and onboarding process. Further, you need to make sure that the details are kept safe, protected, confidential and away from any data theft. This is the most crucial part of employment law, and there are a set of rules on how to do it right. So, you must learn the proper way of documenting your employees, and how to maintain and safeguard their records from any unwanted activities.

Documentation is an important piece of information about the employee which can come in handy during an employee emergency or when a situation arises. Plus, it helps you correct any irregularity in employee information on the system.

5. Have a clear employment policy

Generally, small entities do not have a formal working style. They more or less operate informally. It can be beneficial in the day-to-day operations for a small business, but when your employee strength increases, it can create confusion. This confusion can result in loss of productiveness, inefficiency and may even cause legal problems.

Moreover, if you plan to expand your business in the future, it is always worth taking some time out from your busy schedule to create a proper employee policy handbook which has clear details and instructions about the policies of your company. You can choose to include details such as:

  • Company overview
  • Equality and diversity statement
  • Code of conduct
  • Safety policy
  • Pay and other benefits
  • Discipline and process of termination of a contract
  • Legal notice
  • Acknowledge receipt requiring the signature of the employee

You can get legal assistance from experts to craft this policy.

6. Focus on employee performance management

Though you may be a small business, you still need to establish a performance review or appraisal system for your employees. A review system will help you establish clear expectations and goals for your employees and let them know where they stand on the competency parameters.

An effective performance management system charts a definite path to success for your employees. It helps to develop precise company and personal goals and ways to achieve them efficiently. The employee performance management system is a constructive way of retaining your employees and keeping them engaged with the company. Because when the employees get rewarded and recognised for their performance, they feel valued and motivated to work towards the growth of the company. An elaborate system also helps you identify underperformers.

7. Improve your retention levels

Pay attention to your employees, and track their performance. It is important to not only hire the right employees but also retain your existing employees by giving them the right opportunities to grow and prosper within the company. Chalk out strategies to boost employee engagement by improving communication with employees and encouraging healthy competition within them.

It has been observed that many employees leave the company owing to lack of growth opportunity and work satisfaction. This inadvertently increases the attrition rate of the company. When an employee leaves the company, it is not just the loss of workforce, but also the loss of expert knowledge and skills gained by the employee over the period. And the company has to spend more resources on finding an equally talented employee and training them to reach this level.

8. Resolve conflicts efficiently

Conflicts are not good for a small company. Bigger companies have managers to resolve the conflict between employees, and the matter reaches the HR only when it becomes more serious.

In a small business entity, you may have to solve the problem in the absence of a dedicated HR professional. So, try to resolve the issue empathetically and tactfully. Remember, employees are your most valuable resource, and you don’t want to lose them over a mere disagreement. You can try applying some of the following HR solutions for small business to resolve conflicts effectively:

  • Acknowledge that the situation is difficult
  • Let each employee express how they feel
  • Describe the problem
  • Identify their underlying needs
  • Search for common points of agreement
  • Find relevant solutions to suffice the need
  • Describe the follow-up process you will undertake to monitor the actions
  • Describe your course of action if the dispute continues

9. Ensure fairness and diversity at work

Gradually, as you expand and increase your employee strength, make sure that you keep the right mix of employees across all demography. Plus, ensure your workplace has gender equality and mutual respect. These are the prerequisites for a safe, healthy and positive work environment.

Diversity will ensure equal representation from every stratum of society. Thus, in a small possible way, you are rewarding the deserved regardless of their race or religion. This will build a more cohesive work atmosphere, which is the most vital requirement for a new business.

10. Seek the right assistance

As a small company, you may have to look after many aspects of your business. And looking after HR activities of your business can become time-consuming, and may drain you physically and mentally. Moreover, you may not be able to commit the required time to focus on the growth and expansion of your business.

This may hamper the prospect of your business. So, wherever possible, it is better to seek assistance on human resources for small businesses from expert HR professionals. They can look after your HR requirements, while you focus on the growth and development of your business.

These HR tips for small business owners and entrepreneurs will certainly help them create a robust and efficient HR team for their business. Also, if you don’t have the resource to create an in-house HR department, then you can simply outsource your services to expert HR companies who are technically and professionally well placed to handle all your day-to-day HR responsibilities and can provide you with efficient HR strategies to engage with employees and boost their performance at work.

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Shalini L
Shalini L

One of the prime contributors for this blog, Expertise in Staffing and Recruitment, Content Strategist by Profession. A Music Lover & Traveller by Choice.

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