Most small businesses don’t have a human resources department – it doesn’t make sense to hire an HR manager when you only have 4 employees. But beyond payroll and benefits, there’s a lot that the HR department does in a big company that could impact the success of a small business.

1. Create an Employee Handbook

We’ve mentioned this in previous articles, but it’s so important and often neglected so it bears repeating. The Employee Handbook helps with recruiting and retention, it protects the business owner in the event of employee misconduct, and ensures that the employees know what is expected of them.

What goes into the Employee Handbook

• PTO and vacation policies in detail (number of vacation/PTO days, carryover policy, how to get vacation approved)
• List of paid holidays
• Benefits the company pays for and how much is paid
• Bereavement policy
• Flex-time policy
• Attendance policy
• Dress code
• Retirement plan
• Detailed summary of any other benefits and company-wide policies and procedures

The Employee Handbook should be updated regularly. We recommend keeping a copy of all versions so you can see how to improve your policies as you grow.

2. Detailed Job Descriptions

Lots of job descriptions are too vague to be helpful, and the majority of what the employee actually does ends up falling under “other duties as assigned”. It’s a common mistake to copy and paste a job description from the internet and forget to go back and delete the parts that are totally irrelevant, making the job description basically useless.

An accurate, thorough job description lets employees know exactly what is expected of them day-to-day. It’s a detailed summary with lots of bullet points. Taking the time to write a good job description gives the employer an opportunity to put thought into what they need that position to do, and what skills and personality traits to look for in the hiring process.

3. Regular Employee Evaluations

A formal employee evaluation should happen at least once a year. The evaluation gives employees a sense of belonging, lets them know how they’re doing and how they can improve.

We recommend using a standard form for each employee, with sections for different aspects of the job (i.e. customer service, integrity, communication). Describe how the employee did in each area over the course of the year, using specific examples as much as possible. This shows the employee that you’ve been paying attention, and it gives them an idea of exactly what behaviors to repeat or avoid.

It’s not easy to come up with specific examples for each employee if you leave it until the end of the year. We recommend saving notes in each employee’s personnel folder throughout the year (i.e. a compliment from a client or a note on how the employee handled a tense situation) so you’ll have a lot to pull from when evaluation time comes around.

4. Feedback and Rewards

Just because you have your annual evaluations in the calendar, doesn’t mean you can wait until the end of the year to give your employees feedback. Give positive feedback whenever possible, as long as it’s authentic. That way, if and when you need to correct something, you have a foundation of positivity so your employee knows you value and respect them, making the correction easier to take.

Employee engagement is a trendy topic now, but some businesses still keep their employees in the dark when it comes to how the overall business is doing. Your employees don’t need to know all of the nitty-gritty, but it’s a good idea to keep them in the loop. Let them know if your clients are succeeding, if the business is growing, what you see coming up in the year ahead.

Rewards that are tied to goals are a great way to build morale and engagement. We suggest setting up a team goal and a department goal, tied to a bonus on a percentage basis. This gives employees something to focus on, and is more effective than bonuses that happen seemingly at random, just because the business is doing well.

5. Make Onboarding a Priority

As we discussed in our last article, strong candidates often have multiple job offers within days of entering the job market. One way to stand out is to have an onboarding system set up. A good onboarding system includes an offer letter, a quick process for background screening and reference checks, and adding the new employee to payroll and HR as soon as they’re hired.

We’ve seen many businesses hire an employee after an interview, but provide no paperwork and no documentation. The employee shows up for work and a couple weeks later, the employer remembers to process paperwork.

In this market where you’re competing for the best candidates, it’s in your best interest to do everything you can to stand out as a well-run, well-organized business.

In order to be successful, small business owners need to invest time into the duties that would be performed by a Human Resources Manager in a bigger company. Spending some time now to come up with a system for these five things will make a big difference for your operations in the long run. As always, if you need assistance, we’re here for you at (808) 354-0498.