It can be argued that people are essential to the success of a company. But what do you do, as a small business going through increased periods of growth, when your employees demand more of your time than product development? How do you best allocate your time while also meeting their needs? Which human resource activities are better performed in-house and which HR tasks can you outsource? What happens when you need to reign in the fun activities because your growth has moved you to more of a compliance necessity? These questions, as well as many others, require owners and executives to think strategically about growing their human capital.
Thinking strategically requires a company to have a human resource road map prepared. Recruitment, selection, staffing, training and development, management practices, compensation and benefits, and employee relations are human resource activities that require an organization's time, resources and funding. Connecting people to organizational priorities, clarifying ownership of outcomes and assigning responsibility, guiding the allocation of people investment to the most appropriate activities and motivating people with a sense of purpose are roles which often fall upon the small business owner or executive.
So what are the human resource needs of an organization when planning for future growth? Below are five challenges that we've identified regarding human resource activities and growth.
HR Challenge #1: Recruitment & Selection
Identifying, attracting, retaining, developing and motivating highly skilled workers is a daunting task. Looking at your area's labor pool (who are your competing with for talent), knowing the average compensation (can you pay more or offer a desirable perk or learning experience), advertising/posting your vacancy to get the most reach (recruiters or in-house search), reviewing applications and resumes, interviewing (who will be on your team and have input?), and conducting appropriate background checks are just a few of the issues that owners and executives must address.
HR Challenge #2: Employee Communications
A variety of mediums of communication are necessary to ensure employees understand their rights, responsibilities and your expectations in the workplace. One of the best mechanisms to convey the company's history, mission, organizational structure and the compliance side of employment is through an employee handbook. The culture of your company should be reflected in this handbook. Generally, an employee handbook will incorporate non-discrimination (EEO, sexual harassment, ADA, FMLA), at-will employment, performance management process, benefits (if offered, sick leave, vacation leave, PTO, holidays, health insurance), hours of work (paid or unpaid lunch), codes of conduct, job changes (promotions, transfers), separation of employment, discipline, and a complaint procedure.
Another concern for employee communication is that, as you grow, you may not have the time or opportunity to personally keep every employee abreast of changes. Consider developing an internal employee newsletter or a weekly email message. There are many collaborative platforms available to communicate in a quick and easy fashion with your employees.
HR Challenge #3: Outsourcing
Outsourcing can be an attractive and efficient manner to accomplish certain HR-related tasks. Internally, you need to find out the capacity and knowledge within your leadership team to handle HR-related services. In other words, does your company have the capability (personnel, money, resources) to utilize talent from within the company? If not, then outsourcing may be a better solution. Typical HR-related functions that are ripe for outsourcing include: recruiting, staffing, worker's compensation claim management, health and benefits, training, and payroll.
HR Challenge #4: Ethical Concerns
Ethical concerns can plague a business, if not clearly addressed up front. How will you handle conflicts of interests or employees receiving gifts from outside vendors? Will you allow moonlighting or secondary employment-what if it interferes with getting projects done on time? For positions that are subject to drug testing, how will you handle positive results (terminate versus rehab)? How will you handle complaints of discrimination or fairness - who will be designated to investigate and are they trained?
HR Challenge #5: Employee Burnout and Turnover
It's going to happen. Employees will work too many hours or be stressed about looming deadlines. They will want to please you and show you their dedication. In the beginning stages of growth, employees will have a full plate - one that may spill over, if not handled correctly and may result in burnout and possibly losing valuable talent. Josh Bersin of Deloitte outlines the real costs of employee turnover to include the cost or hiring another person, on boarding, loss of productivity due to a new person learning the job, loss of engagement by the other employees, errors due to learning, training and the cultural impact of adding a new person to the team. The loss of an employee can range from tens of thousands of dollars to 1.5-2.0 times the employee's salary. These costs are very real to a small business.
Thinking strategically must be extended to include your employees. By preparing a road map, anticipating these challenges, and seeking collaboration or help will be keys to successfully growing your human capital.