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Small Business Owners Should Spend More Time On These Five Things

If you think your business is too small to need Human Resources processes, think again. As most small business owners will tell you they wear many hats but often put more focus on customers, finances and their particular area of expertise. Good HR process is an area that can get overlooked, but the minute you have employees on the payroll, HR issues will abound.  

A small business owner should make sure they are getting these five things right, in order to attract, develop and retain good employees: 

Hiring: Don’t hire your friends, it is next to impossible to discipline or fire them. The boundaries between business and friendship are often either blurred or create resentment and tension if enforced. We think friends will be more loyal because of the personal connection, but often that is not true. Take the time to hire properly – consider your needs for the role, and the cultural fit within the organization. The more care you take in hiring, the more likely you will find a good employee. 

Onboarding: Most small businesses don’t have a formal ‘onboarding’ process, and it’s a crucial step that is often overlooked. This is an introduction to your company culture, environment, and fellow staff. Taking the time to onboard a new employee will help set them up for success. Be specific about how they fit in with the organization and any performance metrics related to their role.  As with any other important relationship, put in the effort to make them feel welcome.  Introduce them to others.  Take them out for lunch. 

Salaries: It can be challenging to get salary data to pay people properly. Often small businesses pay too much or too little, because they rely on information from their colleagues, or the employees themselves.  Look for independent, external, market data (recruiters often publish annual salary guides) and pay attention to internal equity (how employees are paid vis a vis each other. Note that when an employee believes their pay is not competitive, their loyalty and performance will suffer.  It is difficult to recover from this.

Bonuses: Small/new business owners may often give their employees generous bonuses at year end out of gratitude for a good year, believing it will engender loyalty and motivate team members. However, a ‘thank you’ type bonus that is not attached to a performance metric will not actually impact the business or the employee’s performance if they do not know how to earn that bonus next year. Also, it can give rise to a sense of entitlement.  Employees are happy as long as they get the annual bonus and as long as it is at least as much as last year, but the negative impact of a bad year is devastating to morale and performance. Bonuses are best tied to specific, measurable achievements

Compliance: Some small business owners may think they don’t need formal policies or try to develop them on their own, but not having them – or not meeting appropriate standards – could end up costing you more in the end. While some legislation is designed for larger businesses much of it is applicable to small businesses as well.  These include, for example, accessibility requirements, harassment and violence policies, health & safety training.  Don’t assume your business is too small; no matter your size, you need to meet certain standards and requirements.

Creating good HR policies and practices for your small business need not be expensive or time consuming. But you might be surprised at how much they will pay off in terms of productivity and reduced turnover.