HR advice for small businesses – getting it right from day one

A sound HR policy is as important for the smallest business as it is for the largest and can save you a lot of headaches further down the line

As a small business owner, you have so much to do that it’s easy to sideline HR issues until they absolutely have to be confronted. 

And when you do have to do things like recruiting new employees or managing their performance, you rely on informal processes that you tell yourself you’ll refine later. 

You can subsist on this kind of ad hoc approach for a while, but as your business grows, you’ll quickly find it unfit for purpose. An inconsistent HR policy is difficult to scale, can create resentment and confusion amongst your team, and can even land you in legal trouble.

That’s why, if we could sum up our top piece of HR advice for small businesses, it would be this: formalise your approach early on and stick to it. 

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Below, we go into depth on the HR advice you need to know to get things right from the get go.

Prepare proper interviews 

As the business owner, you’ll probably have a pretty clear idea of what you’re looking for in a new hire and how they should align with your business values. However, don’t be tempted to wing it when it comes to interviews. 

Whether formal or casual, the tone of an interview is up to you, but you should always prepare proper questions in advance that you use consistently for every interviewee. Not only does this allow you to judge the candidates fairly against each other, but it can help to reduce bias in the selection process. 

During the interview, let them talk. Avoid finishing their sentences or butting in with more questions before they’ve finished a thought. However, if you have any concerns about their suitability, don’t be afraid to challenge them or ask more probing questions.

Lastly, don’t undervalue the role you’re hiring for. Even the most menial or entry-level position is a vital cog in the machine, and hiring someone who is a poor fit just because they were the first person to apply or were ‘good enough’ could have a negative impact on your business operations. 

>See also: Top 10 HR tips

Introduce fair and consistent performance processes 

Someone’s been working hard and asks for a pay rise. Sure, why not? Someone’s been consistently underperforming and needs to buck up their ideas. A quick chat and a gentle nudge should do the trick. 

As discussed earlier, you can get away with this kind of informal approach to performance processes when you have a very small team, but you’ll quickly find it unsuitable as you grow. 

You should set universal conditions for pay rises and promotions, so that everyone has a fair chance to progress and so that the decision-making is transparent whether they are or aren’t awarded. Likewise, if someone is underperforming, there should be an established performance improvement plan that is consistently applied. 

Consistent processes ensure everyone is judged by the same standards, which helps to avoid bias and improves the chances that the best people advance within your business. They’re also scalable, empowering people managers to act fairly and confidently when making progression or performance decisions.

Don’t put off awkward conversations 

A new hire is enthusiastic but clearly unsuited to the job. A long-serving employee fails to get a promotion. A team member’s behaviour is making others feel uncomfortable. The temptation to avoid these awkward conversations is only human. 

However, there’s no time like the present, and the longer you avoid them, the worse the likely impact, from poor morale and productivity to damaged customer relationships and even lost revenue. 

That’s why you need to have those conversations as soon as possible. Here’s how to ensure they’re effective:

  • Don’t skirt around the issue – speak in plain terms so nothing can be misinterpreted 
  • Ensure an appropriate person conducts the conversation – whether it’s you or a line manager, the information has to come from the right person
  • Privacy is paramount – as well as holding the conversation in a private space, be careful not to reveal sensitive information to people who don’t need to know
  • Follow up in writing and ask for a confirmation of receipt – a written summary of what has been discussed ensures everyone is on the same page and can act as evidence in later conversations or in the event of a disagreement

>See also: A guide to outsourcing HR

Outsource to an HR service or software 

You’ll find all of the above is much easier to achieve if you invest in an HR service or HR software. 

  • Interviews – within HR software, you can store and review CVs, create interview templates, create candidate score sheets for easy comparison
  • Performance processes – KPIs and objectives can all be tracked within your HR software, and the targets and requirements that promotions and pay rises are contingent on can be detailed in easily accessible documents, which ensures everything is fair and transparent
  • Awkward conversations – as with the above, all the data and documentation stored in your HR software can provide evidence for difficult conversations, and can record the important details of those conversations for easy reference later 

Next steps

If you want to find out more about HR outsourcing, we can help you find the best platform.

Simply fill in our free quote-finding form, and answer a few questions about your business (it takes less than a minute). We’ll match you with the most appropriate HR support and software provider.

Henry Williams

Henry Williams

Henry Williams is a freelance journalist specialising in small business topics, such as Making Tax Digital.