An HR policy is frequently viewed as a set of rules and regulations and a disciplinary tool used to intimidate employees.
However, if properly crafted, an HR policy can help define your company’s DNA, motivating employees to achieve their goals.
What is a human resources policy?
Along with the marketing strategy and finance policy, HR policy sits beneath the company’s raison d’être. To assist the business, HR processes sit beneath HR policy.
An HR policy ensures that employees understand what is expected of them in the workplace and that everyone follows the rules.
In other words, an HR policy serves as a roadmap for a company’s success.
It focuses on two main topics: controlling company risk, such as data protection and privacy issues, health and safety, and working from home; and assisting employees in performing their duties, such as managing absence, sick days, holiday entitlement, and assuring business continuity.
“I despise the word policies and procedures,” Karen Watkins, founder of specialized SME HR company Rowan Consulting, explains. Many individuals are put off by policies and procedures that suggest we’ll smash your hand if something goes wrong.”
There is no such thing as a single HR policy in reality. It’s a whole slew of issues, each with its own set of policies that fall under the HR umbrella, most of which are detailed in a staff handbook.
Consider an HR policy as a collection of information from several sources. Your employee handbook could have 30-40 distinct policies like this.
An HR policy is a broad word that encompasses existing legislation on topics like:
- Chances for everyone
- Benefits and incentives
- Maternity leave employee relations
- Disciplinary IT systems for working from home
- Privacy and data
- Data security
- Conditions of employment
- Right to vacation
“The entire HR sector is built around how solid our policies and processes are, yet they’re the last thing on any small business owner’s mind,” Watkins says. These folks are business owners. They are creative and think. ‘How do we operate our business?’ should be the title. That is exactly what we are discussing.”
For example, HR policies developed during Covid were updated to help employees function in our “new normal” – such as data risk when working remotely from an internet café and securing client data on your device – reflecting how our working lives have altered since the pandemic.
“Get the basics right, do them effectively, and you can build up as you go,” Alison King, managing director of Bespoke HR, advises on HR policy.
It’s much easier to add to your HR policy than to change something currently in place. So start with the basics and add on from there.
Donna Obstfeld, the founder of DOHR, likens a company without an HR policy to a balloon with a small tear in it. You don’t notice it at first. The air departs, and the balloon deflates only when the firm expands, and something goes wrong.
What steps should I take to create my HR policy?
Many small business owners are hesitant to adopt an HR policy because they believe it would take too much time. But it’s not that tough, though you must exercise caution, particularly when dealing with employment contracts.
You should ask yourself, “What are you attempting to achieve with your small business?” What exactly are you attempting to accomplish?
What matters most is to consider what will happen as your company expands. You must have all of the essentials in place, but not everything. In the future, you may always add to your HR policy.
Think thoroughly before you start and tie yourself up to duties you may have to untie later, says Watkins. In their desire to be generous, many business owners overcompensate from the outset rather than providing the basic minimum, which can lead to complications.
“Think about what you want it to deliver for you,” Watkins advises. It’s not a pick-and-mix approach, and it’s not a one-size-fits-all approach.”
But do I need an HR policy? I only work with family and friends.
Because many family firms employ relatives or best friends, owner-managers believe they don’t need anything written down – after all, isn’t this just between friends?
As your company grows and you have higher expectations of your employees or wish to develop a company culture, HR becomes increasingly vital.
And, especially if you’re employing family members, you must have a written employee policy. Regardless of how well you know them or the size of your company, you still have a responsibility to secure their employee and customer data.
While doing things with a nod and a handshake may appear to be the simplest option, having a documented employment contract or employee handbook is critical when things go wrong.
Many enterprises, for example, had not established worker contracts before the Covid-19 outbreak and the implementation of furlough, leaving everything unsigned, which caused issues when attempting to collect furlough from the Treasury.
“Leaving things unsaid or unwritten might backfire,” King warns. “It can get rather messy when things go wrong.”
Obstfeld has seen many examples of families and friends driving themselves apart because things were left unsaid or were dependent on a verbal agreement.
“As with any sort of insurance, it’s only an issue until it becomes a problem,” Obstfeld explains. And that difficulty only arises when someone wrongs you or takes you to an employment tribunal, forcing you to rely on your HR policy.
“We’ve seen businesses with just one or two employees who don’t have any form of written HR policy leave themselves wide open.” If they face an employment case, they have no buffer or leeway.
“Unfortunately, the biggest trauma can occur when those connections go sour. Because there is no director service agreement or shareholder agreement, I’ve seen brothers in law tear families apart. When you have a husband and wife partnership, it can sometimes lead to the entire foundation of the firm collapsing. There is no documentation indicating how the business would continue or be divided if the partners broke up.”
Is there a requirement for an HR policy to have a certain number of employees?
No, you should have a policy in place as soon as you recruit your first-person because it sets the tone for the rest of your company, especially if you want to expand.
Having an HR policy in place gets you started on the right foot right away.
When hiring a new employee, the first thing an employer must do is draft an employment contract. Because you and your employee both signed the contract, it becomes your responsibility to handle it. It must cover everything you’ll provide, such as the days they’ll be working, their working hours, where they’ll be working, how much annual leave they’ll get, and their income.
The employment contract could be minimal or incorporate some of the most important HR policies. A large employee handbook is unnecessary if you simply have one or two employees.
What if I wish to draught my own human resources policy? What resources are available to me?
If you want to build your employee handbook, the Acas website, which includes a lot of sample policies and best practice examples, is a fantastic place to start.
The government’s website, Enterprise Nation, and the website of the CIPD, the society for HR professionals, are two more places to explore if you’re drafting your staff handbook. Small Business has their HR department.
HR policy templates can also be found in banks and insurance organizations.
All key statutory provisions, such as statutory leave, statutory sick pay, and statutory maternity policies, might be included in the employment contract. You could add in passing that all other statutory provisions apply.
“However, we’ve discovered that many employers have no idea what the term statutory implies,” Obstfeld explains. “It indicates the very minimum, yet they frequently wish to be more generous.”
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Part-timers and employees with distinct religious holidays, such as Eid for Muslim employees or Hanukah for Jewish employees, are not considered in what people select off the shelf.
“What we find is that a lot of businesses want to do something more generous than statutory requirements,” Obstfeld says, “but they don’t have a policy that allows them to do anything different because they wrote it themselves.”
Is it necessary for my HR policy to include a mission statement?
The easy thing is producing a pick-and-mix guidebook on the legal side; the difficult part is articulating your company’s ethos and defining its core.
“That’s incredibly significant to me,” Obstfeld says. I have a business background rather than a legal background. Many handbooks will give you what you need to know from a legal standpoint. We discuss business culture, what it’s like to work here, our values, how we recruit people who share those values, and how they permeate everything we do. Some businesses never consider this. It’s never been expressed verbally or in writing.”
Your guidebook should include a message from you regarding your values. Keep in mind that you are the ship’s captain and navigator. It’s what you believe in and on which you hang your hat.
However, keep your corporate values simple and limited to 3-5. Don’t make the message too complicated.
What are the risks of creating your own human resources policy?
Many small business owners, according to King, incorrectly believe that adopting an HR policy is more difficult and time-consuming than it is. When they try to develop the staff handbook themselves, problems frequently arise.
It can be time-consuming and needless to download material from the internet. The problem is that you may overcomplicate things and impose unneeded rules on your company. You don’t have to list every policy. They must be appropriate for your company. There is no such thing as one size fits all.
Consider the issues your company confronts when developing an HR policy, such as poor internal communication, significant worker turnover, or a history of data leaks, and have your HR policy address them.
A self-written HR policy handbook’s most prevalent flaw is that a single statement might backfire in an owner’s face.
When it comes to employee contracts, and owner-managers do not completely understand provisions or phrases, writing your HR policy becomes extremely problematic.
If you download sample rules from the internet, you unintentionally risk breaking the law if you leave things out or change them.
In most cases, businesses will make a change that renders an HR policy illegal. They will pull something off the internet that is so incomprehensible that they don’t understand what they’re doing and try to amend it, placing them in violation.
What are the benefits of having your employee handbook written by an HR professional?
For the reasons stated above, hiring an HR specialist to design your employee handbook could save you money. It’s tough to undo what has already been written. It’s too late once you’ve issued your self-written employee handbook.
When should a company’s employee handbook be updated?
Legislation is always changing, whether due to new legislation passing through parliament or as a result of case law. Regardless of the number of employees, employers must alter their rules and procedures.
“Most companies will not be aware that the law has changed until there is a problem,” Obstfeld says. “Keeping up with changes is always a problem for small business owners.”
What matters more than simply revising statutory regulations, which occur every two or three years, is how your company’s culture has evolved.
For example, many small businesses have had to entirely overhaul their working-from-home policies in the last several years to accommodate flexible working and the implications for IT policy.
When it comes to developing an HR policy, keep in mind that it’s more than just keeping up with changes in employment legislation; it’s also a vehicle for defining your company’s mission.