When you’re a solopreneur, being in charge of human resources is easy. As a party of one, you can confidently take a vacation to Fort Lauderdale when you feel like it, choose your own employee benefits, and only worry about yourself.
Everything changes when you hire 1 or 2 full-time employees. As your business grows, you’ll likely realize you may need a full-time HR manager or department. It’s crucial to understand how to handle HR functions if your company is still small. If you’ve grown to the point that you need an HR director, you still need to know the ins and outs of HR management because you’ll be overseeing the department. Consider this your crash course in HR management for small and medium-sized businesses.
What does HR do?
If you’ve only worked for a large company, you might think HR folks just sign paychecks and enforce rules. What you may not know is that HR is in charge of every aspect of employee relations, including:
- Talent management
- Managing performance and career development
- Determining salaries and benefits (and comparing them to market norms)
- Developing and nurturing a safe and positive work environment
- Staying compliant with the law(s)
Here’s a breakdown of all HR functions:
This broad category of HR covers hiring to firing, and everything in between. When it’s time to add a new employee, you need to write an appealing job description designed to attract top candidates and start collecting resumes. You might choose to work with a recruiter who can handle many of the initial tasks for you, including background checks, credential checks (like verifying a bachelor’s degree) and reference checks.
Once you (or the HR manager) choose an employee, you’ll also need to complete the corresponding paperwork to make the relationship legal (see below for tips on finding out what you need to be compliant). This is also the time to clarify their job title and responsibilities so everyone’s on the same page.
The first few days and weeks are crucial—you’ll need to get them up to speed on the company’s goals and explain their place within your organization. If several new hires start at once, you might consider a formal new employee orientation—a more casual onboarding session will work, too. Make sure you never overlook the importance of having them feel part of the team right away.
Managing performance and career development
Once employees are up and running, you or your HR team should create an enriching work environment that continues to keep them motivated and challenged. Think about their career development and performance management—HR specialists should study their industry and related fields so they’re up-to-date on the skills that today’s workers want to hone. They also need to connect them with professional development opportunities.
Finally, you’ll need to track employee(s) performance and make sure you have a papertrail of any infractions and disciplinary procedures. This is important because if an employee needs to be terminated, you’ll have the correct back-up that proves just cause to avoid a lawsuit.
Determining salaries and benefits
In today’s tight labor environment, it’s important to offer a compelling salary and benefits package. To retain top talent you’ll want to start with salaries that are commensurate with what’s typical in both your field and the regional market. You’ll also want to consider offering top-tier benefits that include:
- Long and short-term disability
- 401(k) savings or other retirement savings
- Life insurance
- Paid time off (vacation, sick leave, holidays, or a combo)
A number of other perks and benefits are often offered today. Some increasingly popular ones include:
- Bus or parking passes for commuters
- Pet insurance
- Student loan repayment
- Wellness options
- Free snacks and/or meals
The list of potential perks is endless. However, it’s easy to get carried away. Start small and make additions as more new hires come on board. As your company grows, survey them and see what benefits are most valued. This way you’re putting your investment where it matters most.
Develop and nurture a safe and positive work environment
Today’s employees value a positive work environment. Other than strong professional development opportunities and competitive benefits and salary, a positive work environment means you need to have a happy work culture.
People crave work/life balance, so see if you can offer flexible work options when possible. Most also appreciate transparency. Create an open-door policy where employees can interact with management and a robust employee communications policy where you freely share the company’s mission and progress. Also provide accessibility to management at all levels.
Other aspects that contribute to a positive work environment include:
- Team-building events and activities
- Wellness initiatives
- Employee recognition programs
- Performance feedback
- Town halls, surveys, and other tools to solicit suggestions
- Ongoing 2-way communication
You’ll also want to make sure your workplace stays safe and positive. To do so you must resolve disputes or issues immediately. Many employees actively seek a small or medium-sized because they want to feel a sense of belonging. It’s why fostering a positive work environment is crucial.
Stay compliant with the law(s)
Staying compliant is more than just planning activities and keeping employees engaged. As the acting HR specialist, you need to be familiar with a wide variety of laws. These include:
- Labor relations and wage laws: Consult the Fair Labor Standards Act (FLSA) to make sure you are in compliance with issues such as minimum wage, overtime, employee classification and more.
- Antidiscrimination laws: The United States Equal Employment Opportunity Commission (EEOC) protects employees from discrimination based on factors that include race, color, religion, sex (including pregnancy, gender identity and sexual orientation), national origin, age (40 or older), disability, or genetic information.
- Safety laws: The Occupational Health and Safety Act ensures that employees have a safe working environment.
- Applicable insurance/benefits laws: Find out what insurance is mandated, including workers’ compensation insurance and other potential coverage. And make sure you’re legal with provisions, as called for in the Affordable Care Act and the Family and Medical Leave Act.
Create an employee handbook
Whether you have one employee or just hired team member No. 1,000, creating a comprehensive employee handbook is an excellent tool that can not only clarify expectations for new hires, but also help protect you if something goes wrong.Your handbook should include job descriptions and summaries of policies for areas that include expected work hours and absences, vacation policy, salary and commission structure, benefits, dress code, information technology, and repercussions for employee infractions.
A handbook serves as a backup HR department. By asking your employees to read the handbook and sign a statement, you are protecting yourself against the potential for a new hire to say they didn’t know something. It also can be used to clarify policies so employees aren’t always asking or making up their own.
Formalize your HR function
Your HR department is liable to evolve along with your company. When talent management becomes too much for an owner to handle, it’s time to add an HR assistant. It’s critical that employees’ needs are being met and all laws are being followed. Whether you hire an HR specialist who handles the function in-house or you outsource it to a reputable company, a robust HR function is essential for your company as it expands.