If you own a growing small business, you’ve probably felt the pressure of managing typical HR functions while wearing the business owner hat. Have too much on your plate? We thought so. HR encompasses so many important responsibilities within an organization as they scale and grow. This post covers the importance of HR for small businesses, plus a step by step guide on setting up an HR department for the first time and a solution that might just let you outsource some of these HR functions in the meantime (like health insurance for small business).
HR for Small Business: Why is it important?
There are a myriad of reasons why HR for small business is important. Here are a few:
Cultivating a Positive Culture
HR shapes your business’s culture by promoting values, ethics, and a sense of belonging. A strong culture attracts employees who resonate with your mission and vision.
Driving Business Strategy
HR aligns HR practices with your business goals, ensuring that your workforce strategy complements your growth strategy.
Adapting to Change
In a small business, adaptability is crucial. HR supports change management, helping your team navigate transitions smoothly and embrace innovation.
Managing Resources Efficiently
HR optimizes workforce management, ensuring that staffing levels match demand and minimizing labor-related costs.
It’s not just about managing people; it’s about fostering a culture of growth, engagement, and efficiency.
Leveraging HR for Small Business Success
Having HR practices in place helps basic business functions run more smoothly. Here are a few suggestions for doing so.
Prioritize Employee Well-Being:
Healthy and happy employees are more productive. Implement wellness programs, flexible work arrangements, and support mental health initiatives.
Explore HR software and tools that streamline administrative tasks, freeing up HR to focus on strategic initiatives.
Communication is Key
Effective communication enhances transparency, collaboration, and trust. HR plays a pivotal role in fostering open communication channels.
Invest in Training and Development
Develop your HR team’s skills. Their expertise will drive growth, employee satisfaction, and overall success.
Outsource if Necessary:
For small businesses with limited resources, outsourcing certain HR functions can be a cost-effective solution. For example, if health insurance for your small business is a burden, consider outsourcing this function with an easy to use, hands off platform like Take Command (we’ll get to that in a second).
Building an Effective HR Department: A Step-by-Step Guide
Starting an HR department is a pivotal step towards creating a well-organized and employee-focused workplace. Whether you’re launching a new business or expanding an existing one, a strong HR department is essential for managing human capital, fostering a positive workplace culture, and ensuring legal compliance.
By following these steps, you’ll build a strong foundation for managing your organization’s most valuable asset: its people. Remember that the success of your HR department will contribute significantly to your overall business success, as engaged and well-supported employees drive growth, innovation, and lasting success.
Here’s a step-by-step guide to help you establish a successful HR department:
1. Define Your HR Strategy and Goals
Determine the role of HR within your organization. Are you focusing on recruitment, employee development, compliance, or a combination? Set clear goals that align with your business objectives.
2. Gain Leadership Support
Present your HR strategy and goals to top leadership. Secure their buy-in and allocate necessary resources, including budget and staff.
3. Design the Organizational Structure
Define the structure of your HR department. Consider whether you’ll start with a single HR generalist or a small team specialized in areas like recruitment, training, and employee relations.
4. Identify Key HR Functions
List the core functions your HR department will handle, such as recruitment, onboarding, training, performance management, employee engagement, and compliance.
5. Develop HR Policies and Procedures
Create a comprehensive HR handbook detailing policies, procedures, benefits, and code of conduct. This will serve as a reference for employees and ensure consistency.
6. Recruit and Hire HR Staff
Depending on your HR needs, recruit experienced HR professionals or generalists who possess a combination of skills required to handle various HR functions.
7. Set Up HR Infrastructure
Equip your HR department with necessary tools, software, and systems for managing employee records, payroll, benefits administration, and performance evaluations.
8. Implement Recruitment Processes
Develop recruitment strategies, job descriptions, and interview protocols. Create a seamless process from posting job openings to candidate selection.
9. Create Onboarding Programs
Design a comprehensive onboarding program that helps new employees acclimate to the company culture, understand their roles, and integrate into the team.
10. Establish Training and Development Initiatives
Plan training programs that enhance employee skills and promote professional growth. This can include workshops, e-learning modules, and skill development sessions.
11. Implement Performance Management
Develop a performance appraisal system that sets clear expectations, tracks progress, provides constructive feedback, and supports employee development.
12. Foster Employee Engagement
Design programs to improve employee engagement, such as team-building activities, recognition programs, and opportunities for career advancement.
13. Ensure Legal Compliance
Stay informed about labor laws, regulations, and industry standards. Ensure that your HR policies and practices align with legal requirements.
14. Handle Employee Relations
Establish protocols for addressing workplace conflicts, grievances, and employee concerns. Develop a positive and open communication channel.
15. Continuous Improvement
Regularly assess the effectiveness of your HR programs, policies, and processes. Seek feedback from employees and leadership to identify areas for improvement.
16. Foster a Positive HR Culture
Lead by example and cultivate a culture of transparency, empathy, and professionalism within your HR department.
17. Adapt to Business Changes
As your business grows or changes, your HR department should adapt to new needs, challenges, and opportunities.
18. Communicate and Educate
Educate employees about the role and functions of the HR department. Create channels for employees to ask questions or seek assistance.
Don’t have time for this? Let us handle it.
Starting an HR department requires strategic planning, a clear vision, and a commitment to creating a supportive and efficient workplace environment.
But if you’re like many small business owners, setting up an HR department (and funding it) is a bit of a daunting task. There are aspects you can outsource by hiring a virtual HR assistant or offloading the management and administration of employee health benefits.
Take Command’s platform actually does that. Instead of shopping for a traditional group plan, why not let your employees purchase their own insurance and get reimbursed on their paycheck? So much easier.
We do all of the heavy lifting and legal legwork so you can focus on what you do best: driving growth. This model of doing employee health benefits is called Defined Contribution, or Health Reimbursement Arrangements. With the right partner, this can be an easy solution to one of your biggest HR headaches.
- Offer benefits on your terms and budget
- Spend less than an hour a month administering
- Let your employees choose the plans that work best for them