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HR Procedures and Processes for Small Businesses

Small businesses sometimes make the mistake of following an informal arrangement for employing people without any formal employment contract or written proof of compensation or remuneration.

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Small businesses sometimes make the mistake of following an informal arrangement for employing people without any formal employment contract or written proof of compensation or remuneration. The small size of the business may make this seem appropriate with more important things for the small business owner to focus on. The arrangement may last on goodwill and the rapport between both sides, but it is not the best method to adopt and complications may arise when the business expands and human resource laws have to be followed and procedures put in place. Hence it is preferable to have a set of written procedures and processes, which are strictly followed. Small businesses may not have a human resource manager to look into the details, and the business owner often has to manage these HR procedures himself.

A small business must have a clearly defined remuneration package that is comparable to the best in the industry. The salary and perks offered must ensure that the employee is happy with what he gets, remains motivated to put in his best effort and does not contemplate leaving the job for greener pastures. The salary and benefits must include:

  • Monthly salary
  • Annual bonus
  • An annual increment tied to performance
  • Health insurance
  • Social security contribution
  • Leave for medical reasons
  • Vacation of up to 2 weeks annually
  • Retirement benefits

A written set of rules listing the company’s mission, priorities and philosophy always helps the new employee to understand and blend in to the work environment. The U.S. Labor Department also provides information for employers about the federal laws implemented, that can have an impact on the work place. The company has to abide by the regulations and laws and describe its own mission accordingly. The information about the company can be organized into a manual with the following information:

  • History of the company
  • Goals and company philosophy
  • Working hours
  • Equal opportunities employer statement
  • Anti harassment policy
  • Benefits
  • Employee compliance form
  • Code of conduct
  • Code of ethics
  • Safety and technology

Besides this, the small business owner must keep a detailed written record about each employee he hires. Written evidence can be of assistance in case of any legal action, though it may never be needed. Therefore he must maintain the following for each employee:

  • The employee’s resume
  • His job application
  • Record of past jobs
  • References provided
  • Test and interview results
  • Performance appraisals
  • Leave record
  • Vacation days and sick leave

However, all the employee information contained in the files must be strictly confidential and kept secure from others. A separate medical record is always recommended.

The HR policies and procedures must reflect the gentle and humane nature of the small business owner who genuinely wishes for his employees well being. But it must never send the signal that he can be taken advantage. Eventually the success of the small business lies in the harmonious relationship between the employer and employee.

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