Tips to Tackle the HR Challenges Small Businesses Face

Did you know that small businesses represent 99.7 percent of all businesses in the United States? Defined as entities with 500 or fewer employees, they are a major economic driver, employing about half of the nation’s working population. If you are a small business owner, you already appreciate the financial independence and innovative freedom that comes with entrepreneurship. You may also recognize the unique challenges of managing the human resource function of your business. When you consider that compensation and benefits make up a significant part of your operating expenses, it only makes sense to take deliberate steps to ensure you are taking care of your most valuable asset: employees. Here are some suggestions for doing it right.

  • Be diligent about record keeping – Documentation is essential in human resources. Not only should you take great care in keeping records of everything related to your employees, but you must separate out any records from the personnel file that are of a more confidential nature. For example, you should have separate folders for payroll records, I-9 documentation, and medical records. Once you have a filing system in place, you will need to establish a records retention schedule and periodically review it, purging any documentation that is no longer needed. Records retention requirements vary greatly, so do your homework to ensure you are compliant with applicable laws.
  • Create an employee handbook and review it annually – Employee handbooks are the primary source of information about the policies, work conditions, and benefits related to employment with your company. Yours should be written in a way that reflects the company culture, and provides clarity and consistency.  Handbooks should be reviewed and updated on an annual basis. Be sure to include an at-will statement as well as policies addressing FMLA and other leave, drug and alcohol use, harassment, and workplace violence. Employees should be required to sign an acknowledgement form indicating their understanding and acceptance of the provisions outlined in the handbook annually or as major revisions are made.
  • Ensure you are compliant with employment laws and regulations – Human Resources is bound by a number of Equal Employment Opportunity (EEO) laws that prohibit discriminatory employment practices related to recruitment, hiring, training, compensation, promotion, and firing. For small businesses, it can be particularly challenging to know which laws apply since the employee thresholds vary greatly. For example, Title VII applies to employers with more than 15 employees while the Age Discrimination in Employment Act applies to those with 20 or more. As a small business grows, it can easily find itself facing new requirements without even realizing it. Consult the online resources from the Department of Labor and Equal Employment Opportunity Commission for guidance.

 

  • Seek the expertise of outside advisors – Given the breadth and complexity of human resources, the small business owner may benefit from seeking outside counsel and advice from experts, such as recruiters, employment attorneys, tax advisors, payroll specialists, and talent management consultants to name a few. Outsourcing aspects of the HR function can be a cost effective way for entrepreneurs to gain peace of mind while focusing on their core business.

For information on how Allegacy’s Human Resource Consulting can benefit your small business, contact us or visit the Consulting Solutions section now.

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