One of the questions I am often asked by small business owners is, “I only have one employee, why do I need to worry about human resources issues?” While I can certainly understand the question – particularly if they don’t have a clear understanding of human resources, I find myself surprised that I get this same question from small businesses that are much larger than a one person firm. In my career I have worked for (as an employee) and with (as a consultant) a significant number of small businesses that have had several hundred employees and still did not believe they had a need for a staff to perform HR functions (or even a person!). As many times as I’ve experienced it, I’m still surprised.
However, given that experience, I thought it would be a good topic to broach as today’s blog post as I think it may launch some good discussion. So here’s my statement of opinion, even if you have only one employee, you need to have an understanding of human resources issues. And, if you have more than five employees, your understanding of HR and the type of HR program you put in place need to be substantially more comprehensive. My justification follows.
Even if you are among the smallest of small business owners, you are still going to find yourself dealing with human resources related issues (even if you didn’t understand before today that those issues were human resources issues). Some of the areas I’m thinking of would include:
· Finding employees as you need them, and hiring the best ones that you possibly can
· Once you’ve hired the best person, what programs and policies do you need to put in place to make sure that you can keep them
· Training programs to help new employees learn company policies & procedures, as well as their new job responsibilities
· Pay rates – are you paying them too much or not enough; are there any issues with a person being more than another person doing the same work though they have less experience; is there any chance they’ll train with you and then move to your competition because you don’t pay them enough?
· Non-compete agreements. While obviously drawn up by your legal advisor, it’s a human resource responsibility to insure that all new employees have signed them and that this information is tracked in their file.
· Also, company key, equipment, credit cards, etc. – these need to be tracked and monitored by employee to insure that your company is protected
· Benefits – even if your only benefit is a paid holiday, there is still tracking that needs to be done; and if your company benefits are more extensive there is vendor identification, bidding, and management; as well as government reporting, tracking by employee and many other tasks associated with benefits. Also, are your benefits meeting the legal minimum limits required in your state? Are they competitive enough to help you recruit the employees you need?
· Payroll – I know that most small businesses think this can be handled by the bookkeeper, however, there are a great many legalities involved at the state and local level with regard to employee payroll administration, time tracking, records management, etc. If not handled properly, this issue alone can put your company in serious jeopardy!
· How do you counsel an employee if they are having trouble with a co-worker
· How do you counsel an employee if they are having performance issues
· Terminating employees who are not performing or who have broken a company policy (and by the way, development of those policies is another HR issue)
· Annual performance evaluations that need to be done on every employee
· Worker’s compensation – are you paying the correct rate? How do you handle it if someone gets injured at your place of employment or on a jobsite? Do you know what the procedures are and how it will affect your company?
· Do you have an employee handbook so that everyone knows the rules and understands them clearly? If not, this leaves your company vulnerable if an ex-employee decides he or she has cause to sue you.
· Do you have job descriptions for every position – and performance standards?
Convinced yet? This is by no means a comprehensive list, but I believe it will give you some perspective on why the average small business owner shouldn’t be trying to handle human resource issues without the assistance of professionally-trained HR staff member or similar resource.
Remember, the right staff can help you build your company to a great deal of success – or they can contribute significantly to its downfall. As a small business owner, you have enough on your plate with the many hats you are already wearing. Therefore, it’s not in your firm’s best interest for you to manage the details of human resources legalities and such for which you have no training. Just as you need a professional skill level in an attorney and an accountant, I would recommend if you still believe that your firm is too small to have a full-time HR need, then you should hire at minimum a part-time staff member or outsource the work to a consulting firm who specializes in such issues. Either option will give you the benefit of the expertise you need while still keeping your costs as low as possible.
If this article has caused you to re-think the way you are handling your firm’s human resources issues, please feel free to contact us to schedule a free consultation with one of our HR associates to discuss your areas of concern and how we may be able to assist you so you can go back to doing what you do best – increasing the profitability of your company!