HR Best Practices for Small Business Success
How small businesses can stay compliant, create structure, and stay true to their values as they grow.
I work with many small business leaders who share the same struggle: they don't have the capacity to keep running the day-to-day operations while developing products and services and strategizing about the future of the business as they scale.
Does that sound like you?
Maybe you have found yourself in the same position and have outsourced some components of your work to contractors, an intern, or hired part time help. Still, you’re not sure what HR best practices to implement as you grow your team or how to measure the success of that growth.
When my clients find themselves in this scenario, we’ve worked to find the tools and processes that will help them scale successfully. We’ve identified four markers that can help you measure successful growth for your small business:
Healthy retention: Keeping the employees you’ve invested in and who know your business well.
Aligned goals: Making sure that employees or contractors have clear and measurable goals that dovetail with those of your business.
Clear compliance: Understanding and addressing labor laws to mitigate risk for your business.
Continued evolution: Supporting professional development opportunities for yourself and your team.
I’ve broken down each of these markers into bite size chunks to highlight best practices and practical steps on how to reach them.
Big note before we begin: There are major classification differences between Contractor and Employee status. I’ve written a blog post here that helps clarify those differences so you can get it right from the get go.
Marker 1: Healthy retention
I’ve focused on two areas related to retention; getting the right people in with intentional hiring and onboarding practices and then how you support team members throughout their tenure.
Strong retention starts with intentional hiring and onboarding! Small businesses often hire in a rush, getting someone in the door as fast as possible with minimal training so they can hit the ground running. Although this might seem enticing, it can lead to hiring candidates or working with contractors that aren’t a good fit for the position and need to be replaced quickly. It also doesn't set new team members up for success.
Intentional hiring requires planning, creating clear job descriptions (check out this How To video on writing a great one), and performing structured interviews and reference checks.
Onboarding preparation should start well before the new team member’s first day so the training flow makes sense and you don’t miss anything major. Create a training schedule for the new team member and set meetings with the people they need to know to do their work. In addition to completing the required compliance forms (I9, W4, etc.), make sure there is time and space to discuss their preferred learning style and how they best receive feedback (positive or constructive).
Providing ongoing support during a worker’s tenure requires building trust, clarity, and care. Being clear about job functions and expectations helps keep open avenues of communication. Finding opportunities to give and receive feedback and offering transparency in decision-making will help team members feel valued and heard. These actions also build trust that you are making decisions with them in mind.
At the same time, having tools like a written handbook with clear policies that change as the company evolves will provide the guardrails team members need to do their best work.
Lastly, supporting the whole employee through benefits like medical insurance, paid time off, and flexible working hours provide additional value and engagement to team members and engagement can go a long way toward retaining them for longer.*
Marker 2: Aligned goals
Aligning the work team members are doing with the goals of the business is so important for success. It also gives you good data to use when assessing performance.
One tangible way to do this is through structured goal setting. S.M.A.R.T. goals or O.K.Rs are both great frameworks for setting clear expectations and targets across a team or company.
S.M.A.R.T. goals: Specific, Measurable, Achievable, Relevant, and Timely
If you've never set goals with your team before, this is a good model to implement as it sets clear metrics for accountability and expectation setting.
O.K.R.s: Objectives and Key Results
OKRs is a framework that incorporates some of the elements of S.M.A.R.T. goals, however, with OKRs, all objectives and key results are set quarterly, whereas S.M.A.R.T. goals can be customized for any period of time. Another difference is that the objectives and key results are meant to be ambitious or stretch goals, so the target is to get closer to 70% completion toward the objective as opposed to 100%.
Creating a system for group and individual goal setting and referencing objectives can increase engagement and create a shared understanding of values and direction in any small business.
Marker 3: Clear compliance
Compliance is not only about following the rules; it's about mitigating risk for your business. As your team grows, more employee labor laws become applicable, and knowing when and how they apply can directly impact the success of your business.
Federal, state, and local labor law requirements change regularly. Some of these requirements include displaying or distributing required posters, notices, or policies that address topics like minimum wage, employee access to unemployment benefits, and even polygraph protections.
Then there are other internal rules and processes to consider, such as record-keeping limits for storing and discarding documents, and systems/processes for reporting harassment, discrimination, or a request for an accommodation.
There are also things that may not be legally required, but are best practices and can help mitigate risk. For example, training new managers when they assume a leadership role, having regular performance assessments, and creating Standard Operating Procedures (SOPs) when adopting new software or systems to make sure everyone can share that knowledge.
Please note that you will have to comply with all state and local labor laws in ANY state where your employees LIVE and work, not just in the state where your business is registered. That means if you have a distributed team, you need to be compliant with the labor laws in those jurisdictions, too.
Marker 4: Continued evolution
As your company grows you'll need to hire and train or contract with more people, but also your role will shift from a doer to a manager and strategic planner. Professional development opportunities through on-the-job training, external courses, certifications, webinars, and workshops can help fill any knowledge gaps and build the skills required to take your business and your team to the next level.
As you grow, you'll also need to think about what kind of decisions have to be made and who needs to make them. There are hundreds of different decision making models, so choose one that l maps to your values. Models like MOCHA and DARCI are great examples of frameworks for group decision-making that can be a good fit for a small team to share leadership and agency.
Being clear about what decisions are made by whom and understanding the impact of those decisions is another way to delegate work and share accountability and agency with team members.
Remember that evolving as a leader takes intention and work! It can be a challenging transition, especially if you've never managed before. Delegating when you are used to doing everything requires intention, trust, and a willingness to let go of control. You may have to shift from HOW the work is done to WHAT work gets done. Or to put another way, less process and more outcome. It may take time, but trust yourself. Your business will be better off for it!
Ready to change the trajectory of your business?
By incorporating HR best practices, you can reach these four markers of success while staying true to your values and honoring your commitment to your customers.
Is there anything else you do to help manage a growing team? Drop your tips and tools in the comment below!
Need more individualized support implementing any of these best practices?
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