11 HR Basics for Small Businesses

Summary:

• Statistics show that small businesses employ 61.6 million people in the United States, almost half (45.9%) of the US workforce.
  
• With lean HR teams, small businesses must learn how to properly prioritize HR-related tasks.
  
• Human resource management has many areas, and technology can simplify it for small businesses. Workforce.com is a best-in-class platform that helps small businesses with employee relations, labor compliance, payroll, and more.

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Small business owners wear many hats—manager, marketer, strategist, and sometimes even accountant. However, one of the most crucial roles you play is that of a human resources (HR) manager.

While your business may be small, it’s vital to establish solid HR practices. From hiring your first employee to managing a growing team, understanding HR basics is key to fostering a positive company culture and ensuring legal compliance. 

Whether you’re personally handling HR tasks or entrusting them to someone on your team, here are 11 HR basics to focus on for your small business.

1. Labor compliance

Regardless of size, businesses are governed by labor laws under the local, state, and federal governments. This includes rules around employee classification, minimum wage, overtime, anti-discrimination, and workplace safety. 

As a small business, it’s vital to familiarize yourself with applicable employment laws to remain compliant and ensure that your policies are aligned with labor rules. Furthermore, some rules may differ for small businesses and large corporations, so constantly checking and verifying is best. 

For instance, in Massachusetts, businesses with 11 or more employees must provide paid sick leave, while those with fewer than 11 employees are only required to provide unpaid sick leave. 

If you have doubts about the proper protocol for employing someone, you should always consult your state’s Department of Labor.

2. Employee handbook

An employee handbook is more than just an administrative document; it’s a vital tool that sets clear expectations, promotes consistency, and protects your business and employees. But most importantly, from an employer’s perspective, a handbook helps defend against employee lawsuits. Small businesses must prioritize having a well-crafted handbook from the start. 

An employee handbook provides a foundation for a cohesive workplace, ensuring everyone is aligned with company policies and procedures. Sure, employees may memorize only some of the policies in one sitting, but it pays to have this document readily available so they have something to refer back to. It’s vital for clarifying HR policies, work hours, code of conduct, benefits, leave policies, disciplinary procedures, termination process, separation agreements, and emergency procedures. 

Creating a thorough and compliant handbook is a must to prove your business exercises “reasonable care” towards staff. Don’t skip it; otherwise, you will most likely be in for a world of hurt in the future.

3. Job descriptions

Small businesses also need to have job descriptions for every position. And no, I do not mean job postings. I mean job descriptions. These are internal documents that outline critical responsibilities, required skills, expectations, and qualifications for each role in your company.

Referring to job descriptions is extremely useful for things like performance management, promotion, hiring, and terminations.Writing multiple job descriptions may be daunting and time-consuming, especially if you don’t have any in place and are trying to catch up. To help you get started, here are customizable job description templates that you can use.

4. Recruitment

A core area of HR is recruitment. Hiring employees is difficult, especially if you’re just now beginning to build your workforce.

Small businesses should create a recruitment process that outlines job postings, interviews, and background checks. Remember that HR is typically the first point of contact for potential hires, so ensure that you have a straightforward process of how recruitment will go. In addition, see to it that you’re not violating any anti-discriminatory laws.

5. Onboarding

Another vital part of HR is onboarding. A crucial step in this stage is gathering all necessary information and paperwork from an incoming team member. These include employee classification, W-4 and I-9 forms, social security numbers, bank details, marital status, and e-signatures.

Onboarding also integrates new hires into the company. An onboarding plan or roadmap should include steps that cover policies and procedures, training, company culture, and what’s expected of a new employee within the first week, first month, first 60 days, and so on.

Also read: Creating a Better Onboarding Process for Hourly Staff

6. Time and attendance tracking

Time tracking is the backbone of paying your employees correctly. Establish a process for capturing this information to ensure accuracy. Aside from employee time punches and overtime, you must also monitor your staff’s time off and leave balances.

There are several ways to track employee work hours. You can opt for paper timesheets, which are physical records of clock-ins and clock-outs. While simple to use, these are easily tampered with and time-consuming to verify. You can also use punch cards. While more straightforward to implement than paper timesheets, punch cards require clunky time clock machines – prone to mechanical failure and susceptible to buddy punching.

Cloud-based software is another option to track employee time. It can be automated and used across devices like cell phones, tablets, and desktop computers. Software like this typically has additional features to verify timesheets and prevent time theft. Whatever method you choose, go for one that will help you streamline the process of timesheet approvals; this is an area that can take up a lot of your HR admin time.

7. Employee scheduling

Employee scheduling is another significant part of running a business, big or small. While not typically a function of HR, in a small business the HR manager or owner typically will find themselves involved in creating and managing shift schedules.

Scheduling may seem straightforward, but it goes beyond setting and assigning shifts to staff. It is the art of balancing demand versus the number of employees you need to schedule. This is especially true for hourly workforces in the hospitality, restaurant, and retail industries.

Furthermore, you also need a process for when an employee can’t make it to work at the last minute. How do you find available qualified staff? It pays to have a set of steps to follow in such situations so you don’t end up short of people.

8. Payroll

Running payroll involves computing and distributing employee wages and salaries. Typically, you can run payroll yourself with the help of software, or outsource the work to a payroll service company. If you choose to calculate payroll yourself, you’ll need to track hours worked, employee classifications, applicable overtime, tax withholdings, benefits, and deductions. A lot goes into every pay run, and it can be more complex when you have hourly workers. 

Here are some of the basics you’ll need to start running payroll:

1. Employer Identification Number
2. W-4 Forms
3. I-9 Forms
4. State tax withholding forms
5. Direct deposit authorization forms

You also need to establish a payment schedule. Payroll can be released weekly, bi-weekly, semi-monthly, or monthly. To determine which makes the most sense for you, consider business needs, cash flow, industry practices, and state laws or payday requirements.

9. Performance management and feedback

HR departments, whether in a small company or a big corporation, must implement a system for regular employee performance reviews. This is to retain top talent, boost employee engagement, and identify areas where more training may be needed. You must ensure that staff are on the right track and know the value they bring to the organization. When your employees are thriving, so does your business. It also pays to have a program for recognition and rewards to maintain morale and keep your team motivated. 

Performance reviews are not always formal sit-down meetings every month or quarter. In fact, it can be more spontaneous and informal. Coaching can be more in the moment, especially when your managers are on the floor with the team. 

Gathering employee feedback is also an important part of this. Setting up a system where staff can tell you what’s working and what needs to improve is advisable. Use the feedback to optimize your operations and spot potential problems. 

10. Employee development and training

Training and development is an excellent followthrough to your feedback process. Provide training opportunities to help employees develop their skills and advance their careers. This is a good step in preparing them for a more significant role. In some cases, though, additional training is conducted to bridge a gap and bring employees to where they currently are to where you want them to perform. 

It’s also vital to conduct compliance training. Ensure employees receive mandatory training, such as sexual harassment prevention or safety training.

11. Recordkeeping

HR is also responsible for maintaining accurate and confidential employee records such as personal information, performance evaluations, and disciplinary actions. They must also secure compliance documentation and compliance records, such as employment eligibility and payroll records. 

Why is HR important for small businesses?

Small businesses must prioritize HR because it’s the backbone of any operation. Whether you have a dedicated team or just one person to oversee it, you must perform HR responsibilities. You need to be compliant, hire for essential roles, retain top talent, and pay employees correctly to succeed.

While there may be some differences between laws for small businesses and big corporations, the fact remains that HR-related responsibilities exist for both. 

As a small business, prioritizing HR this early gives you an advantage because you can set the tone early and ensure your business is on the right track. It may require a lot of hard work now, but instilling these habits and processes early on will make it easier for you as your business grows.

The benefits of HR software for small businesses

Properly managing the full scope of HR is a daunting prospect for a small business. Typically, HR takes a backseat to more functional duties that keep a business running on a daily basis. However, by using software to shoulder some of the responsibilities of HR, smaller businesses can successfully set up a strong foundation and push through some key initiatives.

Here are the benefits of HR technology and why investing in it is a wise investment for small businesses.

Time and cost

HR management takes time, and software can significantly reduce time spent on manual and administrative tasks such as payroll, time and attendance tracking, and benefits administration. Having a cloud-based system in place frees up time for small business owners or HR staff to focus on strategic tasks. Furthermore, it reduces administrative costs related to paperwork and long hours spent on manual processes.

Improved compliance

HR software helps keep your compliance more airtight. Since it automates most of the processes, you can rest assured that you’re keeping a record of every vital information related to compliance and audits. It also helps track deadlines for compliance-related tasks and provides reminders for legal requirements such as employee eligibility verification and OSHA reporting.

Accuracy

Because HR software keeps employee data centralized. Since it is a single platform to store and manage all employee information, it’s simple and quick to update records, manage benefits, process payroll, and optimize employee schedules. 

HR software simplifies benefits enrollment by providing a user-friendly platform for employees to select and manage their benefits, reducing the administrative workload and improving accuracy. 

It also ensures that all time and attendance records are accurate, making timesheets easier to process every pay period.

Simplified processes

HR is rife with many administrative processes, and if you do them manually, you can quickly find yourself buried in paperwork, tracking employee information, and sifting through legal rules. HR software can simplify all of that for you. 

It can help you automate and standardize onboarding, benefits enrollment and management, time and attendance tracking, payroll processing, compliance, and even some areas of performance management. 

Because HR technology streamlines much of the administrative work, you can focus on making more strategic decisions, such as improving employee benefits package, optimizing schedules according to demand, addressing workplace conflict, and taking action on employee feedback.

Employee self-service and transparency

Employee self-service is another core capability of good HR software. It lets your employees check their schedules, view their leave balances, check their benefits, and update their information. 

Employee self-service capability should begin with onboarding, where new hires can upload their information and necessary documents to your systems. As a result, you avoid double entries, minimize errors, and spend less time on admin. 

Self-service portals often allow employees to update their personal information, view pay stubs, request time off, and access the employee handbook and company policies.

Data-driven decision making

HR software equips managers with better scheduling and workforce planning. An HR software that tracks demand can quickly provide insights into how to create more profitable shifts, ensuring that you’re not over or understaffing. It can also help you determine whether to hire more people or optimize your team’s hours.

Through analytics and reporting features, you can also create strategic moves by tracking turnover rates, employee sentiment and satisfaction, and recruitment efficiency.

Workforce.com simplifies HR for small businesses

Workforce.com understands the ins and outs of running a small business, especially those employing hourly workers. Whether a small business owner or a single team member tasked with HR duties, Workforce.com can be your HR sidekick.

Workforce.com is an all-in-one platform that handles HR, scheduling, and payroll in one single platform. It encompasses all areas of the employee lifecycle, from recruitment to offboarding. Ready to meet your HR assistant? Book a demo to see Workforce.com in action.