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Blog • 25.07.19

5 HR basics for small business

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For small business owners, HR can seem a scary prospect. You’re likely keen to get the foundations sorted, but when you’ve got limited time and money to deal with all the HR basics such as recruitmentonboarding and setting up payroll, it may seem easier to let them fall by the wayside.

However, a cohesive and streamlined HR system can be an essential part of any successful business. Not only does it help you to adhere to employment laws (and avoid tribunal claims!), but it will ensure your employees feel valued and cared for, helping to improve retention, output and overall company performance.

We’ve put together a list of five HR basics and processes that are the cornerstones of a healthy HR system. Once you’ve checked them off, you’ll be well on your way to small business success.

The five HR basics for small business are:

  1. Recruitment
  2. Onboarding
  3. Employee handbook
  4. Payroll
  5. Appraisals

1. Recruitment

For your business to grow in a healthy and sustainable way, you need to hire a strong team of ambitious, capable and talented employees. Having a supportive group around you who want to help make the business the best it can be is crucial for boosting performance and creating a great company culture.

Get the job advert right

Ensure you cover all the key skills required for the role and the responsibilities involved. Take care to keep the wording clear and fair and avoid anything that could be construed as discrimination against a certain group of people.

Plan the interview questions

This is your chance to see if someone will be an ideal fit for your company, so take time to create questions which will get into the nitty-gritty of a person’s skills, experience and methods of working.

Try to avoid boring and overdone questions, as you need to give a good impression of the company and show that it’s an exciting place to work.

Request a reference

It’s important to get signed written permission from a candidate before requesting a reference, and to use a standard reference request letter for everyone.

The key pieces of information you’ll want to gather are the person’s job title and responsibilities, employment dates and salary, but you could also ask for any notable strengths and weaknesses. Take care to comply with data regulations when sending out requests.

Check a candidate’s right to work

Employing someone who does not have the right to work in the UK is illegal and can lead to harsh penalties, including fines and even prison sentences. That’s just one of those HR basics to contend with. This has a heavy impact on small businesses, so ensure new hires send over proof of their right to work (i.e. a copy of a passport or residence card) so that you can follow the rules.

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2. Onboarding

Now that you’ve hired the perfect candidate that will help you to grow your business, you need to equip them with the training and support required to allow them to excel in their role. The onboarding process can take up to 12 months but is invaluable for building a strong team of proficient workers.

Issue an employment contract

It is a legal requirement for employers to issue new hires with written documentation of ‘key terms’ of their employment, namely their pay and working hours, within the first two months of their start date. However, it’s a good idea to lay out the full list of agreements between you and the new employee to avoid misunderstandings and manage expectations.

The contract should include clauses such as the name and address of both parties, the contract start date, holiday allowance and pension policy. Try to make it as clear as possible, and make sure you choose the right type of contract depending on the employment status of the individual: permanent employment, fixed-term or casual employment.

Set manageable targets

Spreading the onboarding tasks along a timeline of the first day, first week, first month and first year will stop the new employee (and you!) from feeling overwhelmed by everything that needs to be done.

Create a checklist made up of individual jobs that you can tick off when completed, helping to create visible goals to motivate new hires.

Get admin out the way

Try to deal with the HR basics before a new employee starts, such as putting together paperwork, creating email accounts and assigning a workstation. This way, you can focus on integrating the new member into the team and giving them their first project without having to worry about looking disorganised.

Save on valuable resources

Putting effort into making an employee’s onboarding experience informative and welcoming is essential in contributing to the company’s long-term success.

Not only will effective training boost overall performance and output, but a great onboarding experience will help new hires to feel valued. This will improve retention rates, therefore saving on the time and costs required to recruit somebody new.

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3. Employee handbook

Also called a staff handbook or employee manual, this is a comprehensive document containing everything a new employee needs to know about your business. This includes the legal policies and procedures they need to follow as well as an insight into the company culture. An informative employee handbook will communicate the values of your organisation clearly and effectively.

Follow the law

It’s a legal requirement to inform all employees about your business policies, and an employee handbook allows you to do this all in one place. No wonder we have included it in our HR basics!

Make the handbook easily accessible and have everyone sign an acknowledgment form to confirm they’ve read it all. This way, you’ll be protected if something goes wrong (for example, an unfair dismissal claim is brought against you), as you’ll be able to prove you made employees aware of your policies from the start.

Free up HR time

For small businesses, time is golden and a lot of it is often taken up by repeated queries surrounding parental leave, pay and sickness absence, to name a few. Having a cohesive employee handbook that answers all those common HR questions will save time that can otherwise be spent on more pressing business issues.

Excite new employees

A staff manual is not just about laying down what employees can and cannot do. It’s a chance for you to sell your company and show new employees exactly why it’s so great to work there. And this is why it is one of the HR basics when running your small business. Whether that’s through an informal style or simply shouting about the office monthly cheese deliveries, it’s an opportunity to grab attention and stand apart from your competitors.

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4. Payroll

Likely to be the biggest expenditure for your company, payroll is an essential part of any well-run business.

Getting to grips with the processes can be tricky, especially for small businesses who may not have a specific department to deal with it. However, a good payroll system will help to keep employee morale high, which in turn will contribute to a boost in performance and overall output.

Understand the calculations

Although it seems confusing on the surface, calculating each employee’s pay follows a fairly straightforward procedure. First their wage or salary is determined, depending on a variety of factors including hours worked, overtime, sickness and bonuses, which vary from business to business. Then tax is deducted according to the individual’s tax code, which is generated by HMRC.

Get organised

Keeping payroll as a simple process is easy when you keep on top of essential paperwork. Stay up-to-date on employment laws, as these can affect how much your employees, contractors and workers will be paid.

Set reminders before pay day to make sure you’re not caught out and get everyone paid on time.

Use payroll software

Paying your employees, and getting it right, is one of the HR basics that you have to accept with running any business.

And small businesses are increasingly turning to software to process their payroll more quickly, easily and accurately. Unlike doing it by hand, which leaves you open to errors, or hiring an accountant, which can prove very costly, payroll software affords you complete control over the process and can be customised to perfectly match your business needs.

Our HR software allows you to generate a ‘Payroll Journal’ each month, saving you valuable time and leaving you worry-free.

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5. Appraisals

It’s vital to keep track of how your employees are performing so that you can use the feedback to make any necessary changes to your business. Having regular performance reviews to discuss achievements and objectives will help to improve staff morale while also helping the company to operate in a more efficient way.

Evaluate against set aims

Having given each employee some aims to work towards ahead of each meeting, you will already have a set criteria which you can judge their performance against. This will help you to identify the individual’s strengths and weaknesses and make any adjustments or implement any training that may be needed.

Create future goals

Once it’s been established how well the employee has been performing, you can then set further objectives for them to work towards that match their abilities. This will help the individual stay motivated and make them feel listened to and appreciated, leading the way for an improvement in their work ethic and determination to succeed.

Add structure

Having a set format for each employee appraisal with streamline the process and make each meeting efficient and effective. Clear and open communication between yourself and your employees makes it easier to spot any wider issues, which can then be dealt with quickly to improve the overall running of the business.

Get HR Support

If you require any further support or advice about any of the HR basics you’ll need to consider in your small business, our HR consultants can help.

Contact us today

Contact us today

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