Human resources is one of the most complex parts of managing a small business. The complexities of employment and managing employees is not as easy as laying everything nicely on a spreadsheet. HR for small businesses is crucial in order to protect and control your company’s assets and expenses.
It’s impossible to hire people to work for your company without having a solid understanding of HR. Regardless of the size of your company or how many employees you have, all small businesses need dedicated HR professionals who understand the ins and outs of HR for the benefits of the company in the long run.
This article will teach you the basic things you need to know about HR functions for small businesses.
What is Human Resources?
Every HR department carries a huge responsibility. HR has a vast effect on the culture and the environment of the workplace, resolving disputes and ensuring teamwork within the company. Many small business owners would rather outsource HR, but there are still components of human resources that the company should do themselves.
Why is HR Necessary for Small Businesses?
When the HR department does their duty, employee performance, dedication and loyalty will rise, hence your business will achieve its goals and fulfill its mission. There are countless statistics that prove the importance of HR for small businesses.
- 75 percent of employees will stay in organizations that address and understand their concerns
- Companies that hire strong candidates experience a 70 percent increase in the quality of hires.
- Disengaged employees are almost twice as likely as engaged personnel to look for a new job.
- Employee engagement leads to employee motivation, increasing company achievement.
Human Resources Management deals with employees, with regards to management, recruitment, performance reviews and other administration and support. Here are a few human resources needs for small businesses in line with the Department of Labor’s laws and regulations:
Hiring and Recruitment
The HR department guards the recruitment and hiring gate, including preparing detailed job descriptions, coordinating and overseeing interviews, whilst explaining the nature of your business to the candidate and preparing a competitive offer. There are employment laws and regulations you must comply with throughout the hiring process such as Equal Employment Opportunity laws.
All successful candidates will go through an onboarding process when hired. During this process, new employees will be given information about the company, the nature of the business and its culture and be provided with the necessary tools to start work on their first day like business cards, email addresses and telephone numbers. Before that, the employee needs to submit a few documents to HR like completed W-4 and I-9 forms, a social security number, emergency contact number and bank account information.
Payroll and Benefits
Payroll refers to the process through which the employee receives their salary. HR is responsible for balancing payroll data and reporting and depositing taxes. The payroll department will deliver payroll checks, record paperwork and edit existing employees’ files. They are also responsible for calculating bonuses, overtime and benefits for the employees.
Performance Management and Reviews
The performance review is a vital part of the ongoing process of evaluation between the managers and the employees. It summarizes employee performance and development based on past performance and the company’s objectives. The assessment is intended to be fair to all employees.
Human Resources must deal with laws and regulations, which is why small business owners often put off dealing with it. But small business owners, (usually owners of a business with less than 50 employees) should keep at least three files organized for each employee:
- I-9 File: This form is used by the U.S Government to make sure employees are allowed to work on US soil.
- Employee General File: This file contains employee information that you have collected during their time working with you. It should also include your employee resumes, reviews, training verification, payroll information and W-4 forms.
- Employee Medical File: These files contain information on any medical information such as medical histories and doctor’s notes that you have received from your employees. You must secure these files and separate them from other files as they are confidential.
There are lists of labor laws and regulations in the workplace that all small businesses should comply with. If you have HR in your company, here are the following laws you should know about:
- Anti-discrimination laws
- Wage and hour laws
- Leave laws
- Immigration laws
- Benefits laws
- Safety laws
- Union laws
Labor Law Poster
Depending on the federal laws of the country or state your business, you may need to display information pertaining to labor laws in the workplace. It’s different from one state to another, so you might want to work hand in hand with a local government agency to make sure you do it right. Place the poster or notice in a place where employees often visit, like the breakroom.