HR and Small Business: The Basics

​Guest Post by Daniel Matthews

It’s simple to manage the first few employees when a small business gets started. But as the startup grows and more supporting staff come on board, managing new hires can be a full-time job. That’s when the human resources (HR) department comes into play.

​Image source: Pexels

When Is the Right Time to Hire a Full-Time HR Employee?

Small business owners often wonder when to hire someone to handle human resources full-time. There isn’t a set number of employees or a magic revenue number to answer the question. But if you’re overwhelmed by onboarding new hires, labor law compliance, and the sticky side of employee termination, the time is now. An experienced and professional human resources employee can take over the more challenging tasks of handling the human side of the work environment.

The Role of the Human Resources Department

As your team grows and each job becomes more specialized, an experienced human resources employee can bridge the gap between the employees and employer. Keeping a company’s team running smoothly and working together is a full-time job. The HR department may be one person, or several, and will carry out many important tasks, including:

Recruiting, hiring, and training new personnel.

Developing and enforcing the company’s rules and systems.

Ensuring your company complies with the pertinent industry regulations and labor laws.

Overseeing employee relations for a better work environment.

Managing employee benefits.

Here’s a closer look at a couple of the essential roles an HR team will take on:

Developing and Enforcing a Company’s Expectations for Employees

One of the most important things you could do before your HR employee gets started is to establish company systems the HR person could fine-tune and build on. An employee handbook is an essential component of the company’s system. It sets the rules of conduct and job responsibilities employees should follow.

You don’t necessarily need a fully fleshed-out employee handbook — the HR employee can help you develop your company’s. Having an outline of your company’s systems and procedures can help the HR person detail the general concepts further, in accordance with federal labor law rules and regulations. An HR employee can research the variety of local and industry-specific regulations while enforcing general federal rules for all employers such as keeping employee records for one year, even after termination.

For example, you may want to include an employee theft prevention section in your handbook. The HR professional can write the procedure and guidelines your company will follow, taking legal restrictions into account. This may include preventing employees from bringing large bags to work and using clear plastic trash bags that can be inspected for stolen goods before they’re discarded.

Overseeing the Work Environment

Workplace stress and conflict is inevitable as your team grows. The HR department plays a large role in resolving workplace tensions to ensure your company provides a healthy environment for everyone. Stress can dramatically impact employee productivity and even increase staff absenteeism. The HR department works with team members to resolve conflicts and improve teamwork between the varying employees or departments.

HR may decide to make suggestions on implementing more employee benefits to promote better employee mental health. Ideas may include discounts on an employee gym membership, onsite yoga classes, or the opportunity to remotely work from home one day per week. A monthly team-building activity such as a softball game or obstacle course race may create better employee unity. Small steps that bring your employees together can improve company morale and improve your staff’s productivity as the HR redirects frustrations or conflict into more productive work activities.

HR Pitfalls to Avoid

New HR employees will have many responsibilities at first. A whole department needs to be set up, with rules and compliance-related tasks needing implementation. One of the biggest mistakes a small business makes is to assume that the HR department can be raised from the ground up overnight.

It’s best to freeze or slow down hiring and prioritize one or two HR tasks per month until all the necessary systems are ready. Doing so can protect you from liabilities such as compliance failures from not having an established employee record-keeping system as mandated by your state. When in doubt, there are programs that could automate the process for you, such as Business Power Tools and Bamboo HR. Once you’re confident employee records are in compliance, payroll is running smoothly, and the employee handbook is complete and in the hands of all employees, you can move forward with recruiting and hiring new talent.

Is an HR Department Worth Adding?

Adding a human resources department to your small business can improve employee retention and free you up to focus on other vital aspects of growing your company. It’s one of the first roles you should add if you foresee your company will need full-time and permanent staff in the future. The HR team will be your eyes and ears in your company, intuitively knowing how to adjust the workplace’s conditions so that everyone can get the job they were hired for done to the best of their capacity.


Author Bio:  Daniel Matthews is a freelance writer from Boise, ID who has written for Social Media Today, Switch and Shift, Triple Pundit, and others. He specializes in company culture, sales and marketing, as well as tech, with a sprinkle of anything super-interesting in the world right now. You can connect with him on Twitter and LinkedIn.

Nancy Gaines

Nancy Gaines is CEO/Founder of Gain Advantages Inc. and has been advising small businesses and Fortune 100 companies how to increase revenues through proven systems for almost two decades. She is a best-selling author and international keynote speaker. Nancy has been named in the Top 100 Productivity Experts to follow on Twitter and has a global podcast downloaded in over 95 countries. Her main focus is creating business processes with actionable steps so her clients achieve more consistency, ease, and ultimate success.

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