But dragging your heels with HR can be disastrous. Without defining key policies – around the structure of your organisation, how you deal with issues, how you look after your staff – you can put your business in a vulnerable position. You might end up deterring new talent, or even worse: discouraging the people who work for you already.
High turnover is something small businesses just can’t afford. Losing people not only damages morale, it also puts extra pressure on existing staff, which could worsen your customers’ experience and eventually impact sales. Having a clear set of company policies ensures fairness and consistency, which keeps staff with you. Companies with a strong HR function have happy staff, answers to every question and the right procedures for when anything goes wrong.
Just like having an accountant, an HR consultant or agency can manage the trickier, time-consuming tasks, so you don’t have to do them in-house. There’s plenty of free HR advice for small businesses out there too. But whatever approach you take, it’s vital to have a coherent strategy.
To help you along, we’ve put together a handy checklist, covering the most important things to consider when it comes to HR for small businesses.
HR Checklist: An overview
You can jump to any item on the HR checklist here or read on to follow it step-by-step.
- Define your culture, mission and values
- Make sense of your organisational structure
- Ensure you’re 100% compliant
- Make your company an attractive place to work
- Put together an employee handbook
- Get a seamless onboarding process in place
- Invest in the right software
- Formalise performance management
1. Define your culture, mission and values
The Great Resignation, where people all over the world are leaving their jobs voluntarily, remains one of the biggest issues for companies right now. In fact, almost a third of UK workers are considering moving to a new job this year.
As you get your HR function set up, one way to respond to this phenomenon is by focusing on what you stand for. So if you haven’t articulated your mission in a compelling way, make sure you do. The same goes for culture, which is a fundamental part of hiring and retention. Of course, your mission and culture aren’t things just to be ticked off a list; but if you’re looking to get your HR policies right, they’re sensible places to start.
Every business is different, but as you think about what distinguishes your attitudes and behaviours from other companies, it’s worth considering what would appeal to staff. What kind of environment do you want to create? What kind of people do you want to surround yourself with? Defining your company values is a crucial part of this process, as it’ll determine what makes your business a good place to work.
2. Make sense of your organisational structure
You’d be surprised just how many small businesses start expanding without a clear organisational structure in place. So before you get to a position where you can increase headcount significantly, make sure you’ve drafted an organisational chart, which lays out the various roles, departments and reporting structure within your business.
Building and maintaining a good organisational structure is like potting a plant: if you’ve done things correctly the first time around, your company will grow in a healthier, more sustainable way. And like culture, mission and values, it should be a precursor to everything else. For some inspiration on what makes an accessible org chart, check out Miro’s templates, or this Powerpoint-ready version.
3. Ensure you’re 100% compliant
There’s a handful of HR policies that every business is required to have in place. First, you need a health and safety policy, which is all about keeping people safe in your workplace. Visit the government’s Health and Safety Executive for everything you need to know here, including how to write your policy.
By law your business also needs a grievance policy, which gives your employees a formal way to deal with any concerns or problems that may arise (that they haven’t been able to resolve by other means). You can learn about getting a grievance procedure in writing here.
Disciplinary policies are a legal requirement too, where you ought to follow the Acas Code of Practice. It’s also worth ensuring your employment contracts are in order, which is something an agency or somebody specialising in HR consulting for small businesses can help with.
4. Make your company an attractive place to work
Compensation and benefits are a balancing act: you want to invest in compelling ways to attract and retain talent, but you’re also restricted by money, in that you can only offer something that your business can afford. So when it comes to how you reward your staff and any additional benefits on top of that, think about what’s both sustainable financially and strikes a chord with your talent pool.
It could be a catch-all solution like Perkbox, with something for everybody. Or you might go for a health insurance platform like Vitality, which has a similarly wide appeal and feels particularly beneficial, as it involves an element of private healthcare. Many businesses are investing in mindfulness-based tools like Headspace for work too, as stress, depression or anxiety now account for 50% of all work-related ill health cases.
5. Put together an employee handbook
Along with all the must-have policies listed above, it’s worth figuring out where you stand on other important areas like sickness, flexible working, equal opportunities and diversity and inclusion. For many people these policies are just as important as a company’s mission, culture and benefits.
Once you’ve got to that stage, the next thing to do is to put everything in one place – so that your employees know what your company’s policies are. An employee handbook is your chance to have a living, breathing HR function that shows staff you really care.
Whatever you do, don’t make your employee handbook boring. Make it something you can be proud of, that goes into all your policies and perks, but also brings your values and mission to life. There’s some great resources out there, from Workable and Notion, for example, which offer readymade employee handbook templates.
6. Get a seamless onboarding process in place
There’s nothing worse than starting a new job and feeling like you’ve been mis-sold: you find yourself alone, left to your own devices; the onboarding process is non-existent, with no clear direction around getting started or how things work.
As a business owner, it’s up to you to ensure that no new starter feels lost at sea. You can improve onboarding processes by putting systems in place that set the tone from day one, with enough structure, documentation and activities to help staff make the most of their first few weeks. As a result, they can start making an impact more quickly.
This is where your employee handbook comes in, as it can be the first thing new people receive. But your onboarding process also hinges on so much more: introductions, assigning tasks, explaining company objectives and providing access to the right materials. citrusHR has put together our own ultimate onboarding checklist, which you can read here.
7. Invest in the right software
A lot of these checklist items can be made easier with off-the-shelf tools, which save you time relying on spreadsheets or having to build something in-house. HR software for small businesses can help you organise your data and get insights from it, as well as spare your team the admin involved with payroll, expenses, training, performance management and more.
Obviously there’s a lot of different platforms out there, so it’s useful to start by identifying what you’re after. Are you in the market for something more niche that solves a specific set of problems? Or are you looking for an all-in-one solution that gives you a range of essential HR software features?
8. Performance management
Ultimately, you stay with a company when you feel like you’re growing with it. Appraisals and performance reviews are one way to give your staff a chance to develop in a formalised way, with the added benefit of ensuring that your workforce is striving towards the right objectives. The reviews process, like regular one-to-ones, also makes sure staff feel listened to. And when staff are engaged, they’re 87% less likely to leave.
When you put together your performance management framework, make sure there’s clear next steps after each appraisal. Staff need to feel that something has happened off the back of the whole process, with concrete information they can use to move forward and track against.
This checklist should provide an overview of what you need to do, but there’s lots to consider. There are platforms that make it easier to get started with HR, as well as experts that can help.
By working with an HR specialist, it’s even easier to get your new policies and processes off the ground.
Want to compare prices from all the best HR providers? Why not use our free comparison tool to be matched with the most suitable provider for your needs.