A Human Resources Startup Guide

Let’s be honest, for most small business owners or entrepreneurs who are starting a new venture, human resources isn’t at the top of their priority list. Instead, most are worried about how to generate new sales, minimize expenses, and improve their product or service. Many otherwise savvy leaders often lack the interest or skill-set to manage the most valuable resource that will make or break the business – their human resources.

If you’re a small to medium-sized business leader who is recognizing a need for how to handle increasingly complex people issues that come along with a growing team, keep reading. Although human resource management is a discipline of its own that entire college degrees and professional certifications are made of, here are some nuggets of wisdom to get you started.

Q: What is human resources anyway? Isn’t it just hiring, firing and payroll?

A: Now that your team is growing, you’ve probably noticed several issues that once could have been resolved through email or a brief passing conversation growing increasingly complex. This is because as you bring more people into your company, new team dynamics are introduced and employment-related legal compliance issues emerge. Human resources is the function that deals with all aspects of managing the people of your organization.

Q: What aspects of managing people fall under the human resources function?

A: Human resources is more complex than the reactive and clerical “personnel” function it was known as decades ago. The aspects of human resources your company should be aware of managing are: affirmative action; diversity; compensation programs; employee benefits development; employee communication; employee relations; policy development; legal compliance; record keeping; performance management; organizational development; candidate sourcing, recruitment and hiring; safety programs; health and wellness; leadership development; succession planning; labor relations and training.

Q: My company isn’t big enough to have a formal human resources department. What are the basics I need to manage right now?

A: As a general rule of thumb, it is recommended that a company who reaches the 50 employee mark should have at least one person assigned to managing the human resources function. This is because many federal and state employment laws which employers must comply with, kick in as soon as a company has at least 50 employees. At a minimum, your company should be prepared to fully manage these six areas of human resources:

1. Compensation and benefits – Stay current on industry and geographical salary trends to attract and keep the best employees. Look at your total compensation package which includes base pay, commission, bonuses, and any benefits such as health, life, dental, flexible spending, disability insurance and paid time off. This should all be managed through an annual budgeting process.

2. Recruitment and staffing – Know where to find the best candidates and what to do once you find them. Establish a recruitment and selection process that is legally compliant and don’t forget about the importance of a comprehensive orientation program.

3. Training and development – Give your employees the tools to perform at the highest level. For starters, make sure everyone has a well written job description outlining details such as who they report to, and their specific responsibilities. Identify required skills and provide opportunities to develop new ones through seminars, conferences or external training providers hired to lead workshops on site.

4. Legal compliance – Save yourself from costly fines, unnecessary lawsuits, bad publicity or possible closure by understanding how to comply with federal and state employment laws. There are hundreds and hundreds of laws of which you are expected to comply. Visit www.dol.gov or www.shrm.org to help you stay current on the ever-changing employment laws and how to stay compliant.

5. Performance management – Did you know that one of the first items a judge or an Equal Employment Opportunities Commission investigator will ask for if you’re ever asked to defend an employment decision is a performance review? Develop and follow a consistent and well documented review process that is tied into the expectations laid out in the job description. Provide specific feedback and set realistic, measurable performance goals.

6. Employee relations – Invest in your people and reap the rewards on your bottom line. Establish a well communicated process to deal with employee issues that are certain to occur if there is more than one person working at your company. Ensure your employees know your expectations and the resources available to them by having a comprehensive and compliant employee handbook.

You get back what you invest into your people. That is what human resources is all about.