Every business, big or small, depends on its people. All the evidence suggests that when the employees are happy, the business profits increase. However, small business owners often pay less attention to their employees.
Profit builders and makers tend to think in straight lines. Therefore, they assume that more people will result in more people problems. One bad piece of that logic assumes that the small company has fewer complications. The fact is that small business owners often give less consideration to their human capital.
What they do wrong
Customers, vendors, public agencies, and taxing authorities all pull on the owner’s attention. They assume everybody in their office or store is on the same path towards the same mission. They fill job slots, drive deadlines, and delegate work without system or consideration. In doing so, they do not hire well, confuse activity with productivity, and fail to recognize work and achievement.
What is the fix?
First-step small businesses do not need Human Resources management, as commonly understood. They do not need a person in charge, and they do not require an office or HR function. What they do need is pre-planning!
- Plan ahead!
People will be part of every small business effort. So, well before you open the door for business, have your people plan in place.
Make a people plan part of your original business plan and proposal. Review it in detail with your coach, consultants, and financers. The exercise will shape your business future.
- Employee count
Roll your business plan out for at least five years, but segment those years into stages. Plan, do not guess, your employee needs for each stage. This is not an issue of numbers; it is an exercise to identify employee functions and job descriptions. One major problem for early stage businesses comes from indiscriminately layering on job duties.
- Compensation package
Plan to pay employees a living wage (that’s different from the minimum wage). Paying better than the minimum wage recruits workers with more ability and ties them to your business with more commitment. Budgeting additional benefits in the form of holiday and vacation pay will yield a return on your investment.
- Create a culture
Plan and budget reasonable rewards for individual and team performance. If individual sacrifice is to be part of the culture, reward should be too. Do not throw money away on donuts when you can buy lunch once a quarter. Do not spend on a holiday party when supermarket gift cards would be more appreciated. Keep in mind that everyone – not just the owner – makes sacrifices in the first stages of the business.
- Automate personnel administration
A small business should not need formalized employee relations or strategic human resources – until the business approaches 50 employees. Prior to that, the administrative job is 95% functional: filing, payroll, and compliance. (The remaining 5% is the owner’s hands-on employee relations.)
However, the earlier you are able to “outsource” those functions to an in-house HRIS (Human Resources Information System) the easier your future will be. You and your staff can trust your HR system with time-keeping, records and privacy, payroll, and assessment calendars. This leaves you more one-on-one time to develop personal and developmental relationships.
With a people plan in place before you open your business, you can structure three to five years into the growth of your company. In doing so, you give yourself the ability to adapt and adjust to the unexpected. Start as early as possible to move the HR duties out of your hand.