Top HR Tips for Small Businesses
When a company is small and everyone wears multiple hats, it can be tempting to cut back on HR responsibilities to focus on other things. But for any business, especially a small business, people are your greatest resource. That means you can’t afford to skimp on your human resources efforts.
This post covers why HR is important, the main role it plays, the different HR pillars, and some top HR tips for managing your people strategy.
Why Is HR Important?
Managing staff takes time and requires specific skills that business owners may not have naturally. When starting a business, leaders are usually focused on getting the organization off the ground. As it grows, there simply isn’t time to deal with the daily requirements of people management.
Unfortunately, some organizations discover that ignoring your HR strategy can be a costly mistake, as HR plays a huge role in every organization (whether you know it or not). The risks of neglecting HR strategy include poor hiring practices, poor benefits management, higher turnover, poor company loyalty and image, and a toxic work environment. On the flip side, a comprehensive human resource management strategy can be a valuable competitive advantage for many small businesses.
What Is the Main Role of HR?
Human resources (HR) is responsible for the management and development of an organization’s employees. That includes several components, such as:
- Recruiting, tracking applicants, and hiring talent
- Onboarding new hires
- Conflict resolution
- Compliance with employment law and safety regulations
- Training and development
- Employee engagement
- Company culture
- Handling legal concerns
The list of HR tasks could easily expand beyond this when you factor in other tasks like coaching managers, workforce strategy, or overall business strategy. But when it comes down to it, what is the main role of HR? Here at BambooHR, we believe it’s to help people do great work. You should gear your HR initiatives toward that end goal. As you strategize, keep in mind that there are several categories (or pillars) that represent different focuses of HR.
What Are the Pillars of HR?
Being an HR professional in today’s workplace looks different than it did in the past. Not only are you responsible for the traditional HR duties like onboarding and offboarding, but the role has expanded to include more strategic responsibilities, such as establishing a positive workplace culture.
Juggling the myriad HR tasks in the modern workplace can be challenging. And for small businesses, prioritizing where you focus your time and efforts is essential. Keeping an eye on the following HR pillars can help you stay on the right track:
- Hiring & Recruiting
- Benefits Administration
- Workforce Strategy
- Legal Compliance
Keeping up with the demands of each pillar can be a daunting task without the proper tools or strategy in place.
HR for Small Business
Does it ever seem like for every item you check off your to-do list, two more magically appear? As an HR professional for a small business, your work can feel never-ending—there’s always something more you can do to make your organization better. That’s why it’s important to embrace this piece of HR advice: don’t ask what you can do; ask what you should do.
To help you focus on the most important tasks, we’ve put together a list of some of our favorite HR tips for managing each key area of your job. You can use these to streamline processes, save valuable time, create a better company culture, and more. Let’s get started!
HR Tips for Managing People Data
Automate your data storage.
Without a way to easily track, update, and store people data, the day-to-day functions of HR take a heck of a lot longer. Filing cabinets or spreadsheets might be better than nothing, but between lost documents and security risks, they can waste a lot of time. To keep your HR data truly secure and organized, there’s no better solution than an HRIS.
Encourage employee self-service.
When you choose an HRIS, be sure it includes employee self-service. This feature allows your employees to access and update their own personal information and preferences without having to knock on your office door. If you already have this feature in place with your HRIS, make sure you’re encouraging your employees to use it. According to one study, employee self-service can reduce the amount of time required for administrative tasks by 40 to 60 percent, which can save up to two hours a day.
Tap into the power of HR reports.
Once your data is organized and easily accessible, reporting also becomes much easier. And since recent BambooHR research found nearly one-third of executives indicated they want more frequent reports on human resources data, easier reporting is great news for HR teams. An HRIS provides faster access to a lot of valuable data such as turnover, demographics, and more that can help your organization make informed, strategic decisions. All you need to do is tap into it.
HR Tips for Recruiting Top Candidates
Eliminate unnecessary steps in your hiring process.
In today’s hiring market, speed is key to winning the best candidates for your organization. Take a hard look at your hiring process and ask yourself if every step is truly necessary. Do candidates really need to sit through nine interviews? Is every section of the application actually useful? A good way to gain a new perspective on your process is to take on the role of a candidate and apply for a job in your organization, complete with multiple rounds of interviews and a final offer. This will help you see how it feels from the candidate’s end.
Prioritize the candidate experience.
Speed isn’t the only priority; you also want to provide an excellent candidate experience whether you hire a candidate or not. Candidates who turn into new hires after a great hiring experience will be more likely to stick around and become engaged employees. At the same time, if those who aren’t hired also leave with a positive impression, they will be more likely to tell their friends and family to apply or to apply again themselves.
Speed things up with an ATS.
There’s a lot of information to juggle during the recruiting process, from applications and resumes to interview notes and offer letters. Keeping everything organized by hand can be a huge time-sink for HR, and one lost document could drastically slow down your hiring process. On the other hand, an ATS can help you manage candidate information, speed up communication, and more.
HR Tips for Effective Onboarding
Take care of paperwork before the first day.
New hires coming fresh out of the hiring process are usually excited and energized, eager to start their new jobs. To capitalize on this enthusiasm, you need to make the most of each new hire’s first day. That means introducing them to teammates and managers, outlining their job expectations, and setting them up for success.
That doesn’t mean asking them to spend half the day signing documents and filling out forms. Take care of that documentation before they set foot in the office with onboarding software, so you can focus on creating an incredible first day.
Understand what new hires want from onboarding.
As much as an effective onboarding process benefits your organization, remember that onboarding should also benefit the new hires going through it. Do you know what your new hires want from the onboarding process?
Our research shows that the majority of new hires desire on-the-job training, an overview of the company’s policies, a review of administrative procedures, and an assigned employee buddy or mentor. Try surveying new employees after they complete the onboarding process to understand which elements they find most valuable and which you may need to improve.
Incorporate culture into the process.
When a new hire joins your organization, you aren’t just asking them to do a job—you’re asking them to adopt and add to your company culture. This means that on-the-job training should include culture training as much as technical training. Using a checklist like this can help you make culture a central part of the onboarding process and get your new hires started the right way.
HR Tips for Managing Compensation
Settle on a strategy.
Making compensation decisions is easier when you have a defined strategy in place. At its core, your strategy should fit into one of three categories: lag, match, or lead. This means your organization can either pay below market value (lag), pay at market value (match), or pay above market value (lead). While there are pros and cons to each, matching market value is the most reliable strategy for keeping employees satisfied and attracting candidates who want to be part of your organization (rather than those who are just after the highest salary).
Communicate openly about your strategy.
Of course, a compensation strategy is only as good as the communication that surrounds it. In other words, employees won’t automatically assume they’re being paid fairly if your organization never communicates its comp strategy. PayScale reported that 89 percent of employees who felt they were paid below market rate were actually paid at or above market rate—only 11 percent were actually underpaid.
What’s more, the study also found that how employees feel about their organization’s pay philosophy and process has 5.4 times as much impact on satisfaction and engagement as the actual numbers on their paycheck. In short, communication matters.
Consider all aspects of compensation.
As you’re communicating your organization’s pay philosophy and strategy, it’s important to consider compensation in broader terms. Sure, it includes an employee’s wage; but it also encompasses benefits, paid time off, perks, and more. Compensation is the total value you give to an employee in exchange for the value they provide to the organization. You can help employees gain a more positive perception of your organization’s comp strategy by incorporating this total rewards concept into your communication.
HR Tips for Performance Management
Talk about performance more frequently.
More and more organizations are doing away with annual performance reviews in favor of less formal, more frequent performance conversations. If your organization hasn’t jumped on that bandwagon yet, the time is now. More frequent performance assessments benefit both managers and employees, as they are able to discuss current events and exchange more relevant, timely feedback.
Simplify performance reviews.
Nothing bogs performance management down like 50-question surveys that take hours to complete. To keep employees and managers engaged in the performance management process, you need to make it simple and accessible. It should feel like an opportunity to provide brief, genuine feedback rather than just another hoop to jump through.
One way we do this at BambooHR is by using performance reviews that ask only a few, meaningful questions, like “What does [Employee] do well?” Keeping it simple leaves more time and energy for your people to exchange important feedback and make real improvements.
Separate compensation and performance management conversations.
In many organizations, compensation is closely tied to performance. While this isn’t necessarily a bad thing, talking about compensation and performance in the same conversation can erode the accuracy and honesty of feedback. Employees may do or say whatever they need to in order to “win” more money, and managers who feel budget pressure from above may tone down a positive review to avoid giving a raise. However, if you separate these conversations, then employees and managers have the space to discuss performance openly without the added pressure of compensation decisions.
HR Tips for Building a Great Culture
Define your organization’s core values.
A positive, enduring company culture starts with a solid foundation. Well-defined values should make up this foundation and inform every decision your organization and your people make. For example, here at BambooHR, we have seven core values that we use to define our culture:
- Be Open
- Assume the Best
- Do the Right Thing
- Make It Count
- Grow from Good to Great
- Lead from Where You Are
- Enjoy Quality of Life.
These values aren’t just cute posters on the wall either—they are understood, embraced, and demonstrated by our people at every level of the organization.
Take time, if you haven’t already, to define your organization’s core values. Seek input from leaders, middle managers, and employees alike to be sure that the values you choose can apply to everyone. Then communicate these values and help everyone in your organization, from the highest executive to the newest hire, adopt and embrace them. Doing this will help you build an authentic, healthy all-around culture rather than a top-down mandate from leadership.
Use rewards and recognition to foster the right culture.
To help your people fully embrace the chosen values and the right company culture, you need to back them up with rewards and recognition. If your organization claims to value quality over quantity but rewards the employee who made the most phone calls, your people are going to sense a mixed message. In fact, rewarding the wrong thing could create perverse incentives and undermine your culture efforts altogether.
On the other hand, rewarding and recognizing performance that aligns with your company culture shows employees that it’s more than just pretty talk.
Seek employee feedback to spot misalignments.
Unless you’re a brand new organization, you already have some kind of company culture. You may even have core values and a supporting recognition program. But culture isn’t a one-and-done project. You need to keep a close eye on the development of your company culture over time as veteran employees leave and new hires come. To keep your culture consistent and healthy, check in with your people periodically to understand their experience. You can do this with formal surveys (like our Employee Satisfaction surveys), regular manager one-on-ones, or ideally a combination of the two.
Gathering employee feedback like this can help you spot areas where the employee experience doesn’t match up with your organization’s stated culture, and knowing those areas can help you decide where to focus your efforts.
These tips for HR professionals should help you get started on the elements that are most important to your organization’s success. Managing HR, especially in a small business, can feel overwhelming at times, but take a page from the BambooHR advice book: Choose, focus, finish, repeat. Choose one thing to focus on, work on it until it’s finished, then choose your next priority. Eventually, you’ll show that to-do list who’s boss and your organization will be all the better for it.