5 HR basics to get you started in your small or start-up business
If you’re a busy small to medium-sized business owner, or hoping to become one, the words ‘Human Resources’ may make you want to run a mile. Policies (ugh!), employment legislation (yawn!), procedures (aargh!). But, the reality is that not taking HR seriously can really hurt.
If you employ someone, you need to pay attention to HR matters. Yes, there are solid, tangible benefits of doing so in terms of productivity and business performance. But most crucially, there are real costs of not doing so in terms of the law and your reputation.
SMEs need a simple, business-appropriate, concise selection of HR tools and resources.
Compliance with the law is a must. Keeping abreast of changes and updates in employers’ obligations is paramount. Becoming an ‘employer of choice’ or a champion of best practice, is a matter of choice, down to you, as and when you’re ready. But for starters, implementing good practice is good enough, and strongly advised.
So my chief concern where SMEs and start-ups are concerned is compliance. Ensuring that you’re equipped with the basics in place to attract, assess, hire and manage employees, and get the right performance from them. And doing this correctly and appropriately, alleviating risk of penalty, grievance or performance issues.
So, in no particular order, my top five absolute no brainer HR essentials are as follows:
1. Employment contract/written statement of employment
When you take on a new employee, they need a contract. This does not need to be a lengthy legal document as the name may suggest. A simple written statement, issued within two months of their start date, including the following basic information:
• name of employer and employee
• date employment began
• date the employee’s continuous employment began
• employee’s job title or brief description of the role
• rate of remuneration or method of calculating remuneration
• dates of payment
• employee’s place (or places) of work
• if employee is required to work outside UK for more than one month:
o period for which he or she will do so
o currency in which he or she will be paid
o any additional remuneration or benefits payable to employee
o any terms and conditions relating to employee’s return to UK
• terms and conditions relating to hours of work
• terms and conditions relating to holiday leave and pay, sick leave and pay and pension arrangements
• notice period to be given by employee and employer
• if not permanent, period for which employment is to continue
• if for a fixed term, date on which employment will end
• any collective agreements which directly affect the employment
• The statement of particulars must also contain a note specifying:
• any relevant disciplinary rules or reference to where these can be found
• any relevant grievance procedure or reference to where this can be found
• the person to whom an employee applies if unhappy with disciplinary action, or to seek redress of a grievance
• whether or not there is a contracting out certificate in force in relation to pensions
Although not a requirement, it is also advisable to include a few straightforward sections covering elements such as confidentiality, data protection, to protect both the employee and the employer.
2. Payroll and pensions
Paying your employees correctly, on-time, and making the required deductions should be a given. One way a small business can organise its payroll is to outsource it – typically to their accountant or bookkeeper. Larger businesses may use a specialist payroll firm. If outsourcing is chosen, good communication is essential: if you don’t tell your accountant that someone has left, they may still get paid.
It can be comforting to know that your payroll is in the hands of a specialist, although this must be balanced against the financial cost and the risk of communication errors, particularly for complex payrolls.
If you choose to manage the payroll in-house, you will need to decide who is going to run it and what tools they will use. In very small companies, it is often the job for one of the directors, but larger firms delegate it to an individual, a team or even a department. Whoever is running the system needs knowledge of the workings of the PAYE tax system, and the returns that must be sent to HMRC.
The law on workplace pensions has changed. Under the Pensions Act 2008, every business, however small, must put certain staff into a pension scheme and contribute towards it. This is called ‘automatic enrolment’. Whether you’re a hairdresser, an architect or employ a personal care assistant, if you employ at least one person you are an employer and you have certain legal duties.
You can set this up yourself or you can outsource it to a specialist auto-enrolment company for a fee. More information can be found at www.workplacepensions.gov.uk. Good practice would dictate that whilst employees are automatically enrolled into it, a supporting document explaining the pension and their options should be provided to staff.
3. Staff Handbook/people management policies
This does not need to be a tome. In fact, if it is, frankly who is going to read it? But a concise record of principles governing behaviour, policies and procedures within your company will protect both you, and your employees. This may be less or more detailed depending on your business (such as if your business involves the operation of machinery, this may require more detail on Health and Safety). But guidelines around dress code, general behaviour, sickness and other leave, disciplinary procedures, appraisal and pay reviews, who to speak to in the case of an issue, are all examples of important need to know subjects for employees. Good practice would dictate that in an ideal world, new employees are not simply handed this Handbook, but talked through it as part of their induction.
4. Recruitment essentials
It should not come as a huge surprise that your recruitment process can affect your ability to attract and hire the right person. But a surprising lack of attention is often paid to this, with negative consequences to both employer and employee. You want the right person who will stay, perform and reflect well on your company. Therefore, your interviews should be professional, prepared, relevant and consistent.
You also simply must comply with all the necessary checks. DBS, immigration status, checking references. This is your responsibility. Ignorance is not a defence.
Then, once you’ve hired, just like in every other walk of life, first impressions count. Believe it or not performance, productivity and staff retention have all been linked to how effectively you induct a member of staff into the company. Devise a proper induction plan covering a tour (if relevant), training, introductions, ensuring all equipment and resources are ready, employment contract and handbook. Consider a ‘buddy’ for new members of staff to show them the lie of the land, the local area and to ask questions informally.
5. Effective and positive performance management
Performance management does not need to involve reams of documentation and hours of weekly meetings. No business owner has the time or the inclination for this (or the employee!). However, employees do need to know what’s expected of them. They need to be able to ask questions and raise concerns. There needs to be a process for monitoring and managing performance and a plan of what to do if things go wrong. The desired outcome of any performance management system is to get things back on track and the best out of an employee. But if things take a difficult turn, a resolution with minimal stress and cost on both sides should be the aim.
Don’t be on the back foot. Be upfront with measurable objectives for all your staff, a sensible and realistic appraisal system, the stages and actions involved in the case of falling performance, and stick to it. Also think about ways that you can make it easier for employees to be high performing. Are you enabling them to do well or restricting their ability to be awesome?
With all these five essentials, you should see a few things in common. They’re designed to protect and support both you, the business owner, and your employees. Once set up, they only need updating and then developing when the time’s right. And they do not need to be onerous, lengthy documents but relevant, concise and realistic.
The good news is that you do not have to do it yourself. You can outsource it on an entirely flexible basis to an HR Consultant who will simply take the brief, and get you set up and compliant. The even better news is that a good HR Consultant won’t over-complicate, oversell or overstate what’s needed.
So once you’ve invested the time and effort to set these up, you’ll be well on your way to a stress free recruitment process, happy hires and minimised risk (hooray!).