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HR for small business

HR for Small Business

In my late 20’s (um not that long ago, said quietly under my breath), I was an Operations Manager for a law firm in Sydney CBD, where I was responsible for over 160 staff.  I think I actually became a professional juggler as every day I was juggling many balls in the air at one time.

My office was a revolving door of staff coming in and out to chat with me about ideas and/or concerns.  My philosophy was to inspire, motivate and empower staff to feel an important part of the business and help them grow in their roles.  This resulted in very minimal staff turnover and created a culture where staff felt respected and part of a team.  The best part was that they trusted me, and this is one of the most important aspects (as well as rewarding) of being a manager and a leader.

What was interesting about this role though was that the Partners & Associates didn’t really understand the value of HR and thought of HR as the ‘warm and fuzzy’ department.  

Now I know I am talking about some 15 years ago and you may be wondering why I am bringing this up, however still to this day there is still some confusion about HR and its impact in business. 

People’s perception of HR is also taken from personal experience with HR departments.  I get that as I know myself before this role, I had dealt with HR departments and they were certainly far removed from being ‘warm and fuzzy’. 

HR is also viewed as the finger wagging big brother standing over businesses making sure they are complying with legislation. 

BUT there is so much more to HR than that…….AND here I stand (on my imaginary pedestal) to hopefully enlighten you and share my insights on the amazing impact HR can have in your business when you view it in its whole entirety. 

When you realise that HR is about your people investing into your vision, you will naturally want to do everything in your power to invest in them. 

Why do small businesses need HR?

As a small business, you have an accountant, IT provider, lawyer and these are seen as absolute no brainers when you start your small business.  Employing staff, depending upon how many staff you have in your business, one salary alone could start from $35K and up.  Why wouldn’t you protect such a large investment in your business? 

You could look at it another way.  You purchase a brand-new car, say the same cost of $35K.  The first thing you would do is insure your car to protect it.   You would take very good care of it to ensure it runs well and looks nice for as long as possible, put fuel in your car and never miss its regular maintenance checks.  

This is the same for your staff.  You need to take care of them with the same attention and commitment.  The fuel is what you put into them to keep them motivated and engaged so they can be productive and perform well and regular maintenance checks are checking in regularly with catch-ups, feedback and reviews. 

It is ultimately your employees who determine the overall success of your business and it isn’t going to happen without your employees’ help. 

That is a powerful and true statement and I think really summarises the importance of why small businesses do need HR.  Here are some more.

  • Only 30% of employees are engaged in the workplace (very small percentage)
  • 75% of employees would stay longer at a business that listens and addresses their needs
  • One of the main reason employees leave a company is because of poor management
  • Camaraderie and peer motivation ranked number 1 motivator to excel at work (TINYpulse survey)

If we look at A grade sporting teams, the reason they win is they work together as a team, the coach works on each individual’s strengths, they practice and they have a game plan.  They always know the game plan.  This applies to business as well.  Make sure your employees know the big picture game plan and then their game plan and work together to create an amazing business. 

HR covers many areas within a business.  It all starts with your business goals and strategy.  At every stage of your business, your people always link into the business strategy. 

But and there is a big but (not the lower end kind), if you don’t employ the right employees from day one, your business won’t be successful and will be a constant battle trying to make a square fit into an oval shape. 

If your business is experiencing constant battle with employees and it feels like you are constantly putting out fires, this may be an indicator that they are not the right fit for your business and never will be.  I like to call it ‘culture add’.  Your employees need to ‘culture add’ to your business.          

I have outlined below the areas that HR is responsible for:

  • Employer Branding
  • Recruitment and hiring
  • Training and development
  • Payroll and benefits
  • Employee retention and employee engagement
  • Work Health and Safety
  • Compliance – HR law and legislation
  • Communication in the business

In speaking with small business owners, the one area that causes the greatest confusion and overwhelm is compliance. 

In this blog today, I am only going to focus on compliance from a documentation aspect.  But don’t worry, I am not going to leave you sitting on the fence.  Besides not being comfortable, I want to help you understand each of the HR areas, how to implement and the impact each one has in your business so stay tuned to my future blogs. 

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HR Documentation

HR Policies

Don’t fall into the trap that HR policies don’t make much difference in your business. 

HR Policies protect your business and clearly outline to employees your guidelines and practices within the workplace.  

There are many policies that you can implement into your small business, however I have outlined below the essentials you MUST have in your small business.

  • Code of Conduct
  • Confidential Company Information
  • Intellectual Property
  • Drug and Alcohol
  • Anti-Discrimination and Sexual Harassment
  • Internet and Email Usage
  • Performance Review
  • Privacy
  • Social Media
  • Workplace Bullying
  • Workplace Health & Safety

I would also recommend

  • General Leave
  • Parental Leave
  • Cessation of Employment

Make sure each of your employees read each policy and sign to confirm that they have read and understand the policy.  This should be done upon a new employee commencing with your business.  However whenever you update a policy, you must provide the new policy to employees to read and sign. 

Employee Handbook

Your roadmap for your employees.  You can kill two birds with the one stone.  Get your employees on board from day one with your why, your vision of the business plus clearly outline to employees what is expected of them.  You do this by providing an Employer Handbook. 

An Employee Handbook describes working conditions, workplace behaviour and contributions you expect from employees.

By providing an Employee Handbook, it provides the essential foundation in creating a harmonious, fair employee and employer supportive workplace.

I recommend that Employer Handbooks be provided prior to your employee commencing so they can read the handbook and familiarise themselves with your business. However, I know sometimes this is not possible due to timeframes so ensure that the Employer Handbook is provided to the new employee on their first day.    

Your Employee Handbook will include the following documents:

  • The business’ mission, values and objectives
  • Welcome letter
  • Culture
  • HR Policies
  • Position Descriptions
  • Organisational Chart
  • Conditions of Employment
  • Dress Standards
  • Induction Process
  • Professional Development
  • And any other information that will help the new employee learn about you and your business  

Employee Files & Records

You need to be diligent and meticulous in keeping employee records.  This is where I go all Maria Condo on you.  Forget the caveman days where you had manila folder employee files and all bits of paper in the file.  Don’t get me wrong, well done for at least keeping records, however somehow those papers seem to end up in the black hole.  A bit like socks when you wash them.  You can never find the matching pair. 

One of the best things you can do for your business is invest in cloud HR software to keep all your records and you will never lose any documentation.  More on that later. 

There is a mantra that I like small business owners to always remember. 

“I must always document any meetings I have with my employees relating to their performance, concerns, issues with other employees and employment conditions.” 

An employee file should contain the following information:

  • Employee Application Form
  • Resume
  • Interview notes
  • Employment Contract (signed)
  • Position Description (signed)
  • Position Agreement (signed)
  • KPIs and Goals
  • Personal Details Form
  • Tax form (signed copy)
  • Licenses and/or certificates (if required)
  • Documented records of any employee incidents
  • Performance Reviews
  • Letters relating to improving performance (if any)
  • Training

Job Description and Job Performance Scorecard

You can’t create an amazing cake if you don’t have all the right ingredients! Well this is the same for your employees and the purpose of your Job Description. You can’t recruit A grade employees and expect your employees to perform if they do not have a clear outline of duties and responsibilities. They too need all the ingredients.

There is a process in creating a Job Description by analysing the position. Asking the right questions – where are the gaps in the business, what skills does the business need, what help do we need? This important information allows you to to design the job i.e. Job Design and create a Position Description on the exact role you require as well the required skills and competencies.

Employees are not mind readers nor possess telepathic powers, however you may be lucky to score one of these gifted people. This is why you need to clearly outline your expectations and what your employees need to accomplish in the role, through the creation of a scorecard.

A scorecard is a simple, but powerful tool to create a blueprint to describe the role’s mission, outcomes that need to be accomplished and competencies/values that complement the culture of the business and fit the role. A scorecard breaks down a business’ vision, mission and strategies into role-by-role outcomes.

A scorecard clearly defines what you want before commencing recruiting and provides the clarity and knowledge to source an A grade employee. It outlines:

  • Outcomes
  • Key Performance Indicators (KPIs)
  • Core values
  • Competencies

Both your Job Description and Scorecard assist you in conducting ongoing performance management of your employees.

HR Software

Without a doubt HR software is your number one system to help you drive your Human Resources functions.

The best investment you can make in your business is to invest in HR software referred to as a Human Resources Management System (HRMS). 

HR software will integrate all your HR functions into one cloud-based management system saving you time and automating tasks. 

HR software incorporates:

  • Employee files and record keeping
  • Position Descriptions
  • HR forms and documentation
  • Recruitment of staff
  • Onboarding staff
  • Staff training
  • Staff Weekly Planner and KPIs
  • Performance Reviews
  • Performance Management System
  • HR Policies and Procedures
  • Operating Policies and Procedures
  • Workplace Health and Safety

Having worked with small businesses for so many years, this is one of my first questions I ask.  Do you have HR software?  It is the first recommendation I make when establishing a HR foundation and best HR practices. 

If you would like to know more about HR software, Indigo HR has an award-winning HR software platform that is a perfect solution for small business. 


HR is without a doubt a main driver in the success of your business, but it is important that it is done properly to have a major impact.

There are a lot of accidental HR managers in business. This means that you are a manager (or not even a manager) that doesn’t have the expertise in HR but performing HR functions. Sound like your business?

Luckily you have 2 options. 

  • Continue being the Accidental HR Manager or;
  • Outsource HR to qualified HR professionals

The advantage of outsourcing HR is it allows you engage the services of qualified HR professionals at the fraction of the cost of employing a HR Manager and it allows you to focus on growing your business.  It is a win-win situation for your business. 

You can have ongoing access to advice, guidance, systems, tools and years of HR expertise at your fingertips.  

Want to know more about outsourcing HR? Let’s chat on the phone, over virtual coffee or face to face. BOOK A FREE CALL NOW.

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