The small business HR checklist – 8 things you should be doing

June 2, 2021

When your business was still in start-up mode, you may or may not have had a small business HR checklist. In my experience? Most start-ups don’t. After all, it’s far easier to build a successful business if you don’t have bureaucratic HR processes to think about – especially if you’ve not even hired your first employee yet.

You can get by for a while without any formal processes. Most early members of a start-up are in it for the thrill, not for stability of employment. But that doesn’t last forever…

Fast forward to now – you’re a small business, with maybe a handful, or even a couple of hundred employees. And sometimes, you find yourself wondering whether you missed anything important on your climb to entrepreneurial success. Does that sound like you?

If so, then take a moment to look at this basic eight-part HR checklist for small business. This is by no means a rulebook that will give you a watertight HR function. But if you’re missing anything from this list, then it’s a good indicator that you might need to take action. This way, you’ll be better prepared to support further organisational growth.

1.  Formalise your HR function

While you’re still in start-up mode, it’s not uncommon for various founding members to simply take the HR function on as one of their own responsibilities. But as a small business, this is rarely feasible – and you need to formalise your HR function.

You might not quite need a fully-fledged HR department. But you should at least have a dedicated point of contact who will take responsibility for all your organisation’s HR needs. And ideally, they should have some sort of HR background… but many HR people come from non-HR backgrounds, such as Office Management, Business Operations, and even Law.

If you are the dedicated point of contact for HR in your organisation, then keep reading to see what else is on the small business HR checklist!

2.  Establish a recruitment and onboarding process

As a start-up, hiring and onboarding is sometimes done with a wink and a nod. But once you’re hiring more than just a handful of people, it helps to have a formal recruitment and onboarding process that you can work with.

Recruitment and onboarding is about more than just finding a good candidate and giving them a start date. Remember that you also need to consider elements such as:

  • Where to post job adverts to find the best candidates
  • Writing and sending offer letters
  • Comparing and tracking the best candidates
  • Verifying legal obligations such as an employee’s right to work information
  • Signing relevant non-disclosure and intellectual property documentation
  • Preparing job specific training
  • Adding all the right employee details to your HR system

This can be daunting, but if you’re not yet ready to hire a dedicated HR or recruitment resource internally, then you might want to consider outsourcing some of these steps to begin with.

3.  Centralise your HR data

As a start-up, you might find you survive OK with a few paper forms or simple spreadsheets. But as you begin to bring more people into your organisation, this becomes tricky to stay on top of.

The sooner you find a way to centralise your HR data, the less headache you’ll cause further down the line. One of the biggest growing pains of a small business, is the lack of scalability in their operations, including their internal HR record keeping.

There’s no law against doing your HR on spreadsheets. But if you want your HR data all in one place – in a way that is easy to understand, and easy to audit – then it’s better to use an easy online HR system like People HR.

4.  Make sure your workplace is compliant

There’s a lot of compliance for HR to consider. Everything from making sure your workplace meets health and safety obligations, through to ensuring your processes aren’t accidentally breaching any of the 9 protected characteristics of discrimination.

Ensuring your workplace is compliant is an expansive topic. In fact, larger organisations tend to have people dedicated solely to ensuring policies and procedures are compliant!

Many large organisations actually split HR, health and safety, and legal, into different departments. Which is great, if you’ve got the resources… but as a small business geared for growth, you may still find your dedicated HR person(s) deal with all three areas of business.

5.  Develop a compensation and benefits structure

It’s important to ensure that your company has a competitive compensation and benefits model. As a start-up, it’s easy to hire people because you have an exciting idea – but as you grow, you need to have a more firm structure in place.

Things to consider include:

  • Competitive pay for each role. Each time you hire for a position, make sure you’re benchmarking the salary against industry averages. If you offer a generous salary, you’re more likely to attract the most talented candidates. Whereas if you try to get away with as little as possible, you’re going to have less choice, and you’ll likely churn more employees in a short space of time.
  • Good company benefits. Employees don’t just look at salary. They look at the full package – benefits, culture, and a good level of engagement within their role. If you can offer extras such as gym memberships and free meals, great – but if you’ve been hanging out on this blog for a while, then remember what Professor Sir Cary Cooper said: Good company culture is not about sushi at your desk.
  • Set up a reliable payroll system. If you can’t pay employees accurately and on time, then business isn’t going to be fun for either of you. Employees don’t appreciate being underpaid late. And if you’re not careful? You could end up accidentally overpaying an employee a significant amount – and watching them run into the sunset.

Yes, that last thing actually happened to this company.

6.  Establish an employee relations model

It’s not all about administration. In fact, if you chose to get into HR, chances are you did so for the human element of the job – and employee relations are a big part of that.

Unfortunately, the bigger your company gets, the less fun employee relations can become. Grievances do happen, and no matter how good you are at resolving employee disputes personally, without a proper process in place, it can become a little too much to handle on your own.

The best way to ensure good healthy relationships are maintained in the workplace – from an HR perspective – is to ensure you have strong established policies in place. This is not so that you can scare employees into not disagreeing with each other – it’s so you know you have a fair and reliable protocol to turn to, if things do get ugly.

And if you’re working remotely, remember that resolving remote disputes brings its own share of challenges.

7.  Set up a training and development programme

As a start-up, you may not consider training and development an essential priority. After all, you’re likely to only be hiring the very specific people who are capable of already doing the stuff you need them to. But as you grow into a small enterprise, you need to consider the training and development programmes you offer your employees.

This is not just important for your employees to feel like they have a future at your company, but it also helps you to continuously upskill your workforce.

Remember to frequently assess for skill gaps and continue to conduct performance management activities. The annual appraisal may be a little outdated, but ongoing peer feedback and frequent check-ins between managers and their direct reports can be a great way to understand what sort of development opportunities to offer each employee.

8.  Get ready for the auditors

You’re probably going to have your HR function audited at some point. This might be an internal audit by senior management, or could be an external audit – for a number of reasons. Either way, you want to be sure that when it happens, you’re ready.

It helps to have all of your HR information in one place – see point three above. Because when you are asked to show evidence of something, it’s easy to find.

Things an HR audit might want to look at could include:

  • Hiring practices
  • Company policies
  • Equal pay documentation
  • Performance reviews
  • Health and safety plans

There’s a lot more to an HR audit than just those few bullet points though. You should seek expert advice to ensure you’re prepared. And in the meantime, you can check out my earlier article: Eight HR mistakes auditors keep finding.

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