Human Resource isn't a thing we do; it's the thing that runs our business.
- Steve Wynne
Have you ever thought about knowing whether your employees are happy? If not, then it is high time you gave it a thought. It is a universal truth that businesses that value their employees tend to perform better. Happy and satisfied employees are more productive and help to improve the overall quality of work. However, recruiting and retaining the right talent is not an easy task, especially for small businesses. Human resources play a pivotal role in a seamless and successful business
. Clear and effective HR policies for small businesses is a crucial ingredient. However, HR is not only responsible for recruiting the personnel but also plays a crucial role in making the work environment healthy as well.
Often, the owner or an executive accepts the responsibilities, since many small businesses lack a dedicated human resources department or full-time personnel to handle the functions. Managing an in-house human resource team can be challenging in numerous ways. Let us take a look at some of the issues that small company entrepreneurs confront.
Human Resource Management Challenges for Small Businesses
Recruiting, retention, payroll, and benefits deficiencies can result in non-compliance penalties, a shortage of competent personnel, and inefficiencies that obstruct your production cycle. Setting up HR policies for small businesses is not an easy task.
According to NetSuite, 47% of human resource departments see staff retention and turnover as their primary concerns.
Common HR challenges for small businesses:
Hiring new staff requires a significant time and financial investment on the part of small businesses
Small businesses lack the time necessary to train new hires, which may jeopardize workplace safety
Managing payroll and filing taxes can be a time-consuming and challenging task
Small businesses face compliance issues
Small businesses do not have human resources department to resolve conflicts
Retaining quality employees is difficult due to HR management issues
On the other hand, establishing a good connection and bridging the gap between the owner and the human resources department will ensure that employees are more goal-oriented and complete the tasks assigned.
A Must-have HR Policies
Health and Safety Policy
A health and safety policy should specify what workers are expected to do in the event of an emergency. For example, when someone is hurt or there is a fire, where are the nearest first aid supplies located and who are the qualified first aid providers.
BYOD (Bring Your Own Device) Policy
Bring your own device (BYOD) is a policy that permits workers to use their own devices for work-related activities. Many individuals in today's workplace utilize their mobile phones, computers, and tablets on the job. While enabling employees to use their own devices might save money, it can also raise issues about security and legal compliance.
The increase in personal device use compels businesses to develop BYOD rules. A BYOD policy is not intended to stop employees from carrying two phones. This policy is intended to guarantee that employees adhere to the stringent security procedures when connecting to the workplace network. It can provide convenience for employees while also saving the organization money. This is one of the prerequisite HR policies for small businesses.
Remote Workers Policy
With the unexpected outbreak of the pandemic, employees began working from home or remotely. The remote work policy defines the guidelines for remote work. Additionally, the policy should define who is qualified to work remotely, as well as outline the associated restrictions and expectations. Ensure that your policy is prejudice free and you have the authority to terminate the right to work remotely, if required.
McKinsey estimated that 9 out of 10 businesses will adopt a mixed work approach by 2021.
Bullying and Harassment
Bullying and harassment policies are often found to be missing from the HR policies for small businesses. However, it is the need of the hour and must be included in the policies to prevent bullying or harassment. Under this policy, employers or employees may be held legally liable for workplace harassment or discrimination. This policy informs employees precisely what constitutes bullying, discrimination, and harassment, as well as how such complaints will be handled and the associated repercussions.
Code of Conduct
The code of conduct policy establishes norms and defines the behavior that a company expects of its employees toward co-workers, managers, and the organization as a whole. According to the policy, employees are expected to abstain from offending, engaging in severe disagreements, and disturbing the workplace. The provisions of the code of conduct policy must be clear and accessible to workers, and they must be explained to new hires.
Communication and Effectiveness of Policies
Small business policies and procedures must be clear and well communicated to all employees. Policies might be incorporated into the employee handbook or maintained as a separate document. Small business rules and regulations for employees differ from those of large organizations, which is why they must be communicated effectively.
The most successful approach to communicating with employees is through routine review meetings conducted by human resources. Conducting a SWOT analysis
, identifying their strengths and weaknesses, developing training programs for strengthening their weak areas, and encouraging them further in their areas of strength.
Disciplinary and grievance processes are crucial, and they must be contained in a written statement of the fundamental terms and conditions of employment. However, rules and procedures must be reasonable, meaningful, and enforceable by employees.
Investors Influence HR Practice in Small Business
According to the Trinity Business School study, small enterprises that are financed tend to follow the human resources and management strategies of their external investors.
It is considered that businesses that obtain funding from high-net-worth angel investors may focus on efficiency improvements. While those funded by private equity companies might take a more strategic approach to expedite expansion and maximize their backers return on investment (ROI).
Human resource plans are an integral component in attracting funding and growing a business. The decision to invest will affect the internal dynamics of the business, such as human resource management. That is why developing sound and effective HR policies for small businesses is critical.
How Is HR in Small Businesses Different from Large Companies?
According to NetSuite, around 35% of employees quit their jobs every year to pursue other opportunities.
The HR department's main focus is on the employees' well-being. The strategy may differ depending on the organization's size. HR in small businesses differs from HR in a large corporation. So, it's important to know what distinguishes HR regulations from those of small businesses and huge cooperatives.
The main differentiating factor between small and large enterprises is resource availability. Small businesses have limited HR staff and budgets. However, you might consult seasoned industry insiders to check if your work policy aligns with corporate aims. You may also hire or consult a third-party business learning program.
The second factor is recruiting and retention. For small organizations, HR experts must actively seek and publish ads on professional networks and platforms. Key companies have tried to establish recruitment processes and have outsourced some or all of them. However, small and medium-sized businesses have turned to less expensive options like pre-employment screening portals to streamline their hiring process.
Regardless of the size of your organization, you must try to get an HR specialist on board. Additionally, it is ideal to communicate critical rules, information, and instructions to staff via comprehensive written policies. Employers must establish a system for resolving workplace conflicts regularly. If a lack of human resource policies can create issues, then ill-conceived policies are also capable of creating problems. The policies listed above take into account the changing nature of the workplace in contemporary times.
What HR policies should a small business have?
Every small business should have these necessary HR policies:
Code of conduct
Bullying and harassment policy
Training and development
Sickness and leave of absence
Why do small businesses need HR?
HR helps you plan for the future, helps you hire the best personnel with the best possible talent, and helps you achieve your goals.
Does HR protect employees or the company?
The main aim of HR is to safeguard the firm by offering qualified employment applicants regularly, facilitating effective and legal recruiting and selection procedures, and ensuring that the company's action are always lawful.