5 Human Resources Tips for Small Business Owners

Find Your Degree!

HR Advice for Owners of a Small Business

  • Take Time for the Right Hire
  • Classify Workers Correctly
  • Employee Handbook for Consistency
  • Maintain Professional Distance
  • Know Relevant Federal Laws

For small business owners and entrepreneurs, there’s almost nothing more nerve-wracking than trying to hire and keep the best workers for your business. Many issues relating to HR for small businesses involve an owner who is unsure of the right practices.

Take Time for the Right Hire

As a small business owner, an empty spot to fill means that you’re losing money. There’s a hole in the company that’s performed by other employees or yourself. Most owners want to fill this position quickly, so they don’t make the best choices during the hiring process. They rush to hire the first person who seems to have the best qualifications. Employers tend to overlook how the person will fit into the current culture of the company. The right hire is more than just a collection of skills and experience. It’s a person that will fit with the current employees and not create friction.

Classify Workers Correctly

Some small businesses will classify workers as contractors when they should be classified as employees. The IRS has targeted small business owners in the past to check on employee records and see if they’ve been mis-classified. Understand what makes a worker an independent contractor versus an employee. If the company has no control over how the worker does their job, the worker is a contractor. If the business doesn’t control the finances of the worker like when they’re paid or if expenses are taken out of their pay, that person is a contractor.

Employee Handbook for Consistency

An employee handbook means that everyone is treated fairly with the same consistent policies across all the workers. If you show favoritism to one employee over another, it leads to resentment and unhappy employees. You’ll want consistent treatment for everyone, and the easiest way to implement that is with an employee handbook that you use as well as providing it for all employees when they’re hired. Consistent rules mean everyone knows what to expect.

Maintain Professional Distance

In some small companies, it can become family-like. Owners might foster a sense of closeness with employees because they believe it will help to run the business. Employees who are invested in the company will be loyal and perform better. Unfortunately, if you don’t act like an employer, you could end up with employees who take advantage. Employees need rules and structure to perform their jobs efficiently. You don’t have to be cold to be an effective boss. Consider yourself approachable and friendly, but a leader of the team. The employees will take your direction, but still have that sense of closeness with you as the boss.

Know Relevant Federal Laws

There are requirements for overtime, the amount of wages and standards for workers under a certain age. You’ll have to know all of the laws relevant to your business to make sure you’re staying within the laws and guidelines relating to human resources. Many mistakes are made by small business owners because they don’t know the laws. One of the biggest laws that employers should understand is the Fair Labor Standards Act.

HR for small businesses can be confusing, but have the right employee handbook shared with all new employees. Make sure you’re not overly friendly with workers, and know all the HR laws that impact the business.

See also: Top 50 Best Online Master’s in HR Degree Programs (MSHR)