Bringing the first employees to your business venture is no easy or insignificant step. Not only are you sharing what you have invested so much time in with someone who is likely a stranger, but you also must now take on the responsibility of being an employer. Other people will depend on you for a paycheck and other elements of making their work life run smoothly.
By deciding to hire employees, you will automatically be implementing some human resources functions – tasks like hiring and setting up payroll are simply inevitable. But instead of just meeting minimum legal requirements, take some time to understand the resources available to you and implement strong human resources practices from the very beginning. This establishes a company culture of caring for your employees and their well-being, and will benefit your business as it grows and expands. You don’t need a dedicated HR manager to execute these function properly; many online tools and resources make it easy for entrepreneurs to have the know-how and tools to care for their employees.
Essential Functions of Human Resources
The essential functions of human resources are, in the simplest terms, all the processes and procedures that support and relate to the people working in an organization. In some larger companies, the role of human resources is expanding to include strategic team development, but the basic daily operations of establishing new employees and supporting current ones remain the same regardless of company size. These include understanding employment law compliance, developing a thorough hiring strategy, and implementing structures for payroll and benefit enrollment.
Educate Yourself on Employment Law and Regulations
Starting a business comes with plenty of legal requirements, and hiring employees brings a new set of laws into the mix. As an employer, you must ensure that your work environment is compliant with all rules governing safety, accessibility, and discrimination. Before hiring any employees, take some time to read through the major requirements to gain some familiarity with them. You may not become an expert immediately, but knowing the most significant requirements and, more importantly, where to find answers to future questions, will lay a strong foundation and cultivate trust from your employees.
Many government websites have worked to organize these requirements in an easy-to-read resource. A few of these are listed below as starting points to familiarize yourself with employment law.
- Hire and Manage Employees from the Small Business Administration (SBA)
- Equal Opportunity Employment Commission (EEOC)
- Occupational Health and Safety Administration (OSHA)
Outline a Hiring Plan
HR departments often handle the administrative side of the hiring process. They post openings, schedule interviews, and take care of all necessary paperwork. As an entrepreneur or small business owner, that all becomes your responsibility. To stay organized, outline the entire hiring process before even posting a job description. Consider every element and know what tools you will use and what an estimated timeline will be. This prevents rushed or desperate hiring decisions, and makes you seem more prepared to job candidates who may be hesitant about being the first employee at a new business.
Posting the Job
Recruitment on a smaller scale relies heavily on crafting an accurate and compelling job description – and then making sure the right people see it. With dozens of career sites available, it can be overwhelming to decide which will be the most effective, so do a little digging to determine which sites are most popular for your location and industry, or which are easiest for you to use. Most companies will post jobs on several sites, but don’t go overboard posting on every site you can find.
Here are some resources on writing job descriptions and posting jobs:
- Best Free Job Posting Sites from MightyRecruiter
- How to Write a Job Description from Indeed
- Monster.com Resource Center
Once you have a pool of applicants, initial screening is necessary to decide which candidates to interview. Since interviewing is a significant time investment for both employer and candidate, in-person interviews should only be conducted for the strongest three or so candidates. To determine who to interview, consider conducting phone screens or a pre-interview assessment. These require less time for both parties and can provide additional information that résumés can’t quite convey.
Here are some resources on pre-interview screening processes:
- 5 Best Phone Interview Questions from Betterteam
- How to Make a Phone Screen Worthwhile from Workable
- Pre-Employment Testing from Forbes
Conducting interviews is a common managerial task, but if it’s your first time interviewing candidates, it can be a little intimidating. What questions will reveal what you need to know, and how can you be sure job candidates are answering honestly? Check out some of these resources to prepare for conducting an effective job interview:
- 5 Tips for Conducting an Interview from Business News Daily
- Conduct the Perfect Job Interview from LinkedIn
- 15 Interview Questions to Ensure Candidate Quality from Glassdoor
Reference and Background Checks
Well-conducted interviews should nearly finalize a hiring decision, but before making an official offer, take the extra time to conduct reference and background checks. While it can be tempting to hire on a gut feeling, this extra due diligence may reveal something the interview didn’t catch. Reference checks can be as simple as confirming employment and asking a few short questions to the candidate’s previous manager, or they can provide more supplemental information to get a clearer picture of the candidate. Background checks can also range in their extent, and small businesses can often conduct them quickly through an online platform.
Outline a reference and background check policy so you can remain consistent when you hire additional employees. Here are some reference points for conducting these checks and establishing those policies:
- The Importance of Reference Checking from RecruitLoop
- The Right Way to Check Someone’s References from Harvard Business Review
- Creating an Effective Employment Screening Policy from ShareAble for Hires
- Best Background Check Sites from Fundera
There are a lot of steps to hiring an employee, but having a well-defined plan from the beginning can make it seem less overwhelming and establishes a precedent for hiring as your business continues to grow.
Track Compensation, Benefits, and Perks
Prior to making an offer, determine compensation based on the market value for the work and your company budget. Benefits and perks are considered part of the total compensation package, so be sure to include all of that information in the job offer. If the salary is on the low end for the industry and position, acknowledge this and make up for it where you can with generous perks, such as flex time, telecommuting options, or weekly lunches. Here are some guidelines on determining compensation:
- 5 Tips to Determine a Salary Scale from Inc
- Calculate Benefits’ Worth to Evaluate an Offer from Monster
- Compensation research from PayScale
Setting Up Payroll
An accurate payroll system is absolutely necessary from the get-go, even with just one employee. Most importantly, a system helps avoid tax penalties, but implementing a comprehensive payroll software can make tools for other functions available as your business grows and adds more employees.
Here is more information on choosing and implementing a payroll system:
- Why Payroll Software Increases Productivity from CustomerThink
- Payroll Software Reviews from Capterra
- Zenefits Resource Center
Establish Feedback and Conflict Resolution Procedures
HR departments are often most well-known for carrying out disciplinary procedures when company policy is broken. In a small business, this hopefully won’t be a common problem, but it is still helpful to outline what feedback and conflict resolution will look like.
As a manager, learning to give regular and consistent feedback will strengthen and grow your employees and business. This can often be done in weekly meetings or as situations requiring feedback emerge. Before hiring, however, small business owners should outline the process for remedying more serious performance issues, such as verbal and written warnings and performance improvement plans.
Here are some resources on establishing feedback procedures:
- How to Implement a Feedback Culture from Cleverism
- 7 Feedback Culture Tips for Small Business from DialMyCalls
Human resources is a complex and comprehensive set of functions that help businesses of all sizes support and their employees and contribute to business growth. As an entrepreneur taking on employees for the first time, it can be overwhelming to attempt to navigate all the elements of establishing company culture and procedures that will lay the foundation for a strong business for years to come. By taking time to think through each element and outline a cohesive process, your small business can establish human resources mechanisms and functions that will benefit employees and your business for years to come.
Sophia Conti is a contributing editor at 365 Business Tips, a new blog that curates the best ideas and information for small business owners. She specializes in helping businesses streamline their processes and procedures.