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A Small Business Guide to Implementing Human Resources

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At first, HR may seem like an attractive option, rather than a necessity. You only have a few employees, so you don't need to spend much time on HR practices.

Then, wham, you get fined for non-compliance. One of your employees resigns due to a conflict with his or her supervisor, and another begins to deliver substandard work.

That's when you realize you need an HR department because you can't manage and solve all these problems and run your business at the same time.

Here are our 6 steps to creating an HR department in your small business:
  • Create HR processes
  • Establish a structure
  • Fill the skills gap
  • Define HR key performance indicators
  • Collaborate with other departments
  • Choose an HR solution

Benefits of creating an HR department

Outsourcing your HR processes has its advantages, but it's expensive and unsuitable for a start-up company. You need to set up your own HR department.

Maintain a healthy work environment
Create a workplace where employees feel comfortable, supported and motivated. This is crucial to the success of your business, but it takes time and expertise.

An HR department develops policies and procedures that create a fair workplace. It also resolves conflicts and listens to employee concerns to ensure they feel heard. All of this helps your business run smoothly and helps employees feel empowered to perform at their best.

Stay compliant
Comply with regulations. If you don't, you risk heavy fines for missing deadlines or failing to submit the right forms at the right time. An HR professional will handle regulatory issues so you can avoid penalties.

Your HR team can stay on top of the ever-changing regulations and make sure they have all the necessary information and signatures from employees. It will send the right documents to the appropriate organizations before the deadline.

Attract and retain top talent
Recruitment, onboarding, talent management, performance management, learning and development are all functions managed by the HR department. They are critical to creating a workforce that can drive business performance and increase profits.

Set up an HR department and all these details will be handled, legally and in a timely manner.

How do you set up an HR department for your small business?

You need a structure before you can set up your HR department. This step-by-step process will help you get started.

Step 1: Create HR processes
The HR department isn't just about people - processes are also critical. Well-defined HR processes help attract, source, recruit, onboard, train, retain and exit top talent. With them, your HR department will create a structure that benefits your business.

These benefits include:
  • Making better decisions, faster
  • Aligning with the organization's strategy
  • Ensuring you meet business objectives
  • Optimizing your resources to ensure you have the right level of staff.

Step 2: Establish a Structure
You need a structure, whether your HR department is a one-man band or a growing company with 10 HR professionals. Start by assigning roles and responsibilities, ensuring HR compliance and implementing HR best practices and processes.

Typical roles in your HR structure include:
  • Director of Human Resources
  • Director of HR
  • Recruiting Manager
  • Recruitment Specialist
  • HR Coordinator

Step 3: Fill the Skills Gap
Once you have a structure in place, conduct a skills audit to ensure you have the experience and skills needed to manage your HR operations.

Recruit new HR professionals or upgrade the skills of existing employees by training them in the skills you lack. This will be part of your overall staffing plan that will support your organization in the short and long term.

As you grow, you will also need to recruit or develop skills for HR functions such as:
  • Performance management
  • Benefits administration
  • Compliance
  • Full cycle recruiting
  • Onboarding

Step 4: Define HR Key Performance Indicators
Measuring success is an important part of HR for small businesses. To do this, you need to define HR KPIs, which measure the performance of different HR functions. They indicate whether your processes are working optimally or whether you need to make changes.

These KPIs should be part of your broader HR planning strategy and contribute to your overall business goals. Here are some KPIs to track:
  • Time to hire
  • Talent acquisition and retention
  • Employee satisfaction
  • Absenteeism
  • Performance management
  • Training Effectiveness
  • Productivity

Step 5: Collaborate with other departments
The HR department plays an important role in all areas of the business, from sourcing and recruiting top talent to onboarding, managing performance and organizing training.

When setting up the department, you need to get input from other managers and functions to ensure that your processes support employees and add value, rather than adding unnecessary administrative tasks.

How are these departments managed? What do they need from HR? Create alliances to support each other in defining processes and achieving your HR goals.

Step 6: Choose an HR Solution
It's impossible to manage your HR department with spreadsheets or paper, and it's even more difficult to comply with ever-changing regulatory requirements.

You need HR software that can automate laborious, time-consuming tasks and free you up to perform more complex tasks, such as:
  • Setting better key performance indicators and goals.
  • Produce more accurate reports
  • Optimizing your processes
  • Keep employees happy

The best HR software for small business owners

The right HR software will help you build a human resources department. Take a look at our selection of the top three HR solutions for small business owners.

IceHrm is a Human resource management system for small and medium-sized organizations. This HRM software centralizes employee data and allows secure access to your data, providing a high level of security.

It covers all the basic HRM needs of a company such as Time Management, Attendance Management, Expense management, leave management, Recruitment management and handling employee information.

All of these features allow you to reap the benefits of an HR department, such as creating and maintaining a healthy work environment, and attracting and retaining top talent.

Click here to enjoy their free trial.

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