Updated: Jul 20, 2022
HR management for small businesses is just as important as it is for big organizations, and the processes aren’t very different - even if you have only one employee. After all, your employees are one of your most important assets. And treating them right is an important investment for the growth of your business.
But according to the Small Business Administration's definition of a small business, you could have as many as 100 to 1,500 employees with annual revenue of $750,000 to $38.5 million. In this case, you’ll definitely have bigger HR issues to deal with. But not to worry, this posts highlights and provides you with 10 practical tips on the best HR practices for small businesses.
So, here we go.
1. Create a Strong Employee Retention Plan
Hiring the right talent isn’t where it stops. If you really want to be an employer of choice, you have to create the right atmosphere to retain the best talents. For instance, your organization must have a culture that appreciates great performance and provides opportunities for employee advancement. So, as you source for the best talents, be sure to have a workplace that allows them to do their best work and thrive.
2. Pay Attention to DEI
Millennials today prefer to work with organizations that provide them with the best environment to thrive. This invariably includes working for multi-cultural and diverse organizations that are known for equity and inclusion. Diversity, equity, and inclusion constitute a major discussion point in the HR space today, and every organization looking to accelerate its growth - whether small or big - would want to take DEI seriously.
3. Stay Updated on Employment Laws
Every once in a while, the government updates employment laws - and it’s in your best interest to know and understand them. In case you’re starting your business, these regulations typically cover every aspect of employee management, including interviewing, hiring, training, retaining, and terminating employees. There are also regulations guiding employee benefits and pension. Knowing them saves you a lot of trouble.
4. Offer the Best Employee Benefits
No doubt about this one; your employees are at their best when they are best-taken care of. The better the benefits your employees can have, the better your reputation, and of course, your business grows faster. Here are some more reasons why you should consider offering the best employee benefits to your workers.
5. Develop an Employee Handbook
It is a good HR practice to have an employee handbook. You may also call it a standard operating manual. Consider your company’s safe operation guidelines for everyone, including management staff. Ideally, your employee handbook should be updated at least once every year. In fact, it is standard HR practice to review and revise your employee handbook every year. Also make sure that any new hire joining the firm has a copy of the book.
6. Focus on Employee Performance
Honing in on employee management allows you to pinpoint the factors affecting employee performance and limiting your business’ growth. This is also a tactic for measuring employee performance and accurately addressing low-performing staff based on the metrics you’ve measured. However, you must have defined the metric upon which employee performance will be measured so that everyone runs with the vision. For further guidance, you can check out these top employee performance metrics.
7. Create a Safe and Secure Working Environment
Another concern facing HR teams is the issue of security in the workplace. We understand that today’s work environment has changed drastically, with way more people working remotely now than ever before. This is one of the main HR challenges that small businesses face in current times. But that does not mean you shouldn't invest in creating a serene, safe, and secure work environment, where employees can work with confidence and do their best work.
8. Network with Other Small Businesses in Your Niche
You can also check other small businesses in your domain. Consider joining a professional organization or your chamber of commerce to connect with other small business owners. It‘s an opportunity to share knowledge and learn how to navigate common HR issues from other professionals in your industry.
9. Partner with a PEO Company
By far, this is your best bet when it comes to providing your employees with the best workers’ compensation and benefits plans. PEOs are professional HR outsourcing firms that take the majority of the HR burden off the shoulders of small businesses. They do this by providing you with a suite of custom services best suited to your industry and specific business needs at an affordable rate. Partnering with a PEO company allows you to enter a co-employment arrangement and enjoy the benefits of shared liability; you can grow your business without worrying about HR issues.
More questions, check out our resource that answers the most common questions: What is a PEO?
10. Proper Payroll Management
Frankly speaking, many good companies have fallen because of poor payroll management. Once your employees cannot trust you to handle payroll accurately, you may need to do extra work to ensure their loyalty to your firm. Generally, you want to make sure to avoid these common HR issues.
Over to You
Now that you know the best HR practices for small companies, it’s time to take action. You may already be on track with some of these tactics, but most likely, you need to sit up in other areas. So, there you have it. If you’re hiring an in-house HR team, ensure that all operations are aligned in favor of our employees, your business growth, and compliance with regulations.
Need further help? Reach out to us today at Mission. The Mission is a leading partner in the PEO, HR, payroll, and benefits outsourcing marketplace. We provide a valuable service for small and medium-sized organizations and government contractors, serving as a trusted partner in integrated human resource (HR) compliance, risk management, employee benefits, employment practices liability insurance (EPLI), and payroll processing.