HR always seems to get a bad reputation. Some have a problem seeing how Human Resources adds value, while others think it’s little more than a clerical job. In the eyes of many, it looks as though HR just sides with management and fires people. That’s mainly the case because in some workplaces, the only time employees see someone from HR, bad news soon follows. Improving HR’s reputation can seem to be a difficult task, but there are simple ways of accomplishing it.
Improving Your HR Practices
During early planning, you must make a personal commitment to what Human Resources can mean to your business’ future and how it will function while you’re growing your business. Of course, you won’t need a fully-developed Human Resources function for some time. However, you need the cultural commitment that protects the business and helps your employees know where you stand on employee concerns.
It’s in your small business’ best interest to plan on core HR functions such as:
- Performance management and reviews
- Employee development, motivation and training
- Safety and wellness
- Communication between employees and/or with management
Here’s some help: 7 Signs it's Time for Your Business to Hire More Staff
First Lines Of Defense
You must secure and maintain employee files in privacy.
- I-9 forms for all employees in a central file subject to audit.
- Employee information file should contain the address, Social Security numbers, employee applications, recruiting information, W-2 forms, performance assessments and paperwork related to the employee.
- Payroll records.
- Employee medical files containing records on the employee’s medical histories, tests, leaves and so on. You must secure these files under HIPAA regulations.
A well-prepared Employee Handbook sets the tone for employee/employee and employee/manager relationships. It helps your employees know what you expect of them, and it can protect the business in the event of a dispute. You can purchase or download free Employee Handbook templates from many online resources.
In addition to statements on the business mission, vision and core values, your small business Employee Handbook should include:
- Non-Disclosure Agreement: Employees must understand their role in protecting your trade secrets and intellectual property.
- Anti-Discrimination Policies: Explain that your business complies with anti-discrimination laws and how employees should handle concerns and complaints alleging discriminatory behavior.
- Security: The handbook should detail employee rights under OSHA, how to report a Workers’ Compensation injury and claim, as well as the business’ position on protection against hostile workplace issues. This is also where you lay out the employee role in the personal use of computers, entry and exit, using personal devices and smartphones and so on.
- Compensation: The Employee Handbook should explain the business’ position on wages and benefits. Employees should know there’s a “second payroll” including the benefits offered, paid time off, holiday pay, Social Security contribution, and more.
- Time and attendance: Employers have a right to an employee’s work on time. Schedules and calendars help organizations perform. Employees need clear regulations on reporting in and out, explaining absenteeism, vacation and leaves of absence.
- Conduct: Even a small business can define things like their own dress code and guidelines on personal use of computers and mobile devices. But, the Employee Handbook should also define ethics, conflicts of interest, and their impact on the business.
With or without an HR department, you are responsible for risk management. That includes hanging the posters required by federal and state regulations, securing entries and exits, eliminating risks to employee safety, assuring compliance with OSHA and Americans with Disabilities Act and insuring employees for Workers’ Compensation. You should have these elements in place before you put up your open for business sign.
First Lines Of Offense
Your small business success depends on you making aggressive and assertive moves in Human Resources. In addition to the defensive measures outlined, your business can use HR practices to set the culture and tone, assess and reward achievement, as well as empower and engage employees.
- Recruiting talent: Small businesses wrestle with how to hire talent when their ability to pay is tightly budgeted. The inclination is to fill positions with hands and feet who can simply do the job when the company actually needs talent that can grow the business.
- Funding talent: When small business owners finance their business, they must think about funding recruiting. The inclination is to fund equipment, facilities and hardware first, but you also need funds to underwrite recruiting and training.
- Assessing performance: You need clear ways to measure and communicate your satisfaction and/or concerns with your talent. It’s important to communicate effective performance measurement processes. And, with few employees in a small business, it’s a great opportunity to conduct 360° evaluations.
- Describing jobs: When you start your business, you should have model job descriptions in place. They offer an opportunity to work with the talent hired on expansion, modification, and improvement of a job description that remains open to growth.
- Sharing the big picture: Small business owners should share their vision. They should also draw the career paths new hires can pursue. Employees, even the best talent, want that sense of what’s in it for them.
CPA Practice Advisor covers a study that indicates “as many as 70 percent of small businesses in the United States – which equates to potentially 1.5 million of them – handle the human resources (HR) function with staff members who manage it on an ‘ad-hoc’ basis in addition to their primary job. The study also shows that these ad-hoc HR managers spend more than 13 hours a week on average on human resources tasks, taking significant time away from their core responsibilities.”
The report labels these ad hoc functions as aHRMs.
- 75% worry about consistently and accurately sticking to proper HR compliance regulations.
- 82% have no certification nor formal HR education.
- 50% are uncertain that the employees know where they should go with HR questions.
- Roughly two out of three are concerned about employees getting the correct information on benefits.
- 50% use spreadsheets or paper to manually conduct HR tasks.
- Fewer than 25% feel as though they have all the necessary tools to properly perform the job.
The report asserts, “Based on this time spent and the average wage of a small business employee, the study calculates that these small businesses are essentially paying $18,800 a year to have untrained staff manage the HR tasks of the business.” It adds that “despite this estimated loss of investment in core business functions, 98 percent of survey participants say they don’t plan to hire trained HR personnel.” Now, that may result from the owner’s business naivety, but if it is a question of funding, there are solutions.
If your small business needs funding for HR (or anything else!), it’s time to look at what types of financing are available. We take a deeper dive into financing for small business in this ebook, “The Basics of Small Business Financing.” Learn more specifics about how to get a small business loan, how to open a business line of credit, or get government contract financing.
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