The top 5 HR basics for small businesses

The top 5 HR basics for small businesses

When you're running a young company or startup – whether you're a small business owner or just part of the management team – it's not always obvious what you need to focus on from a Human Resources perspective.

After all, HR for startups is a wide topic, taking in employment law, employee performance, HR policies, employee engagement... these are pretty specialised subjects, and it can be hard to know where (or how) to get started on your own.

The good news is that a lot of small businesses don't need a fully-fledged HR department, or even someone working on HR full-time if your team is still quite small.

Instead, there are a number of HR basics that you can put in place on your own. This will give you the solid foundations your company needs while it's growing and can push back the point at which you need to think about outsourcing your HR or hiring a full-time HR professional.

In this post, we've set out the top 5 HR basics for small businesses, giving you everything you need to put in place some great HR foundations.

The Top 5 Human Resources Basics for small businesses

1. Make sure your small business is legally secure

The first step on this list of HR basics for small businesses is making sure your company is secure and protected from a legal point of view. As a small business owner or anyone running a small company, you're responsible for making sure your business is compliant with UK employment law.

Employment contracts

The first thing on your to-do list is to get your employee's contracts of employment sorted. Many small business owners fall into the trap of either forgoing contracts altogether, thinking that this is something they can sort out later, or using generic templates that they find on the internet – but this is a mistake.

HR compliance is essential and it means getting contracts of employment drafted by a qualified Human Resources expert and tailored to fit your company's unique context – whatever the size of your small business. This is where you need to set out all the essential information about your legal relationship with your employees, including details like your sick leave policy, work hours, employee benefits, health insurance and more.

Legally required company policies

According to UK employment law, every business needs three specific HR policies on file. The policies are

  1. A Health and Safety Policy
  2. A Disciplinary/Dismissal Policy
  3. A Grievance Policy

It doesn’t matter what size your company is right now, or how few team members you employ – if your small business doesn’t have these documents, then it’s already in breach of employment law.

If you'd like to learn more about these three essential company policies and how to get them in place, you can download our free guide below.

Click here to download the three policies you need to be compliant

2. Make your HR processes effortless with HR software

As a small business leader, you’re already juggling too many responsibilities — you simply can’t add HR admin to your plate, on top of everything else.

That’s why it’s important to get an HR system to automate as many HR tasks as possible — so that you stop wasting time on repetitive admin that doesn’t deserve your attention.

Here are a few ways that HR software for small businesses can help streamline your processes:

A system for tracking time off

Many small businesses start off by tracking their team's time off and sick leave via an ad hoc of email requests that are tracked in a DIY spreadsheet. However, very soon this becomes a real time-sink that will inevitably lead to mix-ups – missed requests or holiday clashes that leave you short-staffed.

The solution is to set up automated time off software, like the kind we offer with CharlieHR. Automated time off software allows you to totally remove yourself from the process of requesting and approving holidays. It also calculates prorated holiday allowances and rollover for you, no supervision required.

A seamless onboarding process

Whenever you bring a new hire into your business, there’s a whole load of information that you need to collect before their first day just to keep your company compliant with employment law. Right to Work documents, P45s, contracts of employment, next of kin, equal opportunities data... There are a lot of loose ends to tie up (and some potentially serious pitfalls if you forget).

But with the right HR software, you can distill this convoluted employee onboarding process into a single click. We’ve designed Charlie to deliver a fully compliant process for you, leaving you to focus on making the new employee feel welcome.

Keen to see how it works? Click below to start a free trial of Charlie.

Click here to try Charlie for free today

Store all of your team's data, all in one place

Even once you have all that information, you still need somewhere safe to store it – and remember, this is some pretty sensitive information about your new employees, so it's important that it's stored securely.

Charlie’s security protocols are ISO 27001 certified and fully GDPR compliant, so you know that data is being stored safely.

Don't forget to have a look at our HR checklist to find out more about what's important for your business.

3. Use performance reviews to create a culture of growth and development

Today, the most successful small businesses are the ones that prioritise their team’s growth and development. There's a simple reason for this – employee performance is the single biggest factor in the success of your business. Your team provides the energy and momentum that drives your business forward.

Emphasising employee development is also a key aspect of employee retention – today's top talent demand a working environment that helps them be their best, and if they don't find it at your company, they'll find it somewhere else.

The most effective way of doing this is by setting up a system of performance management. Performance management comes in many different shapes and sizes and will differ from company to company, but essentially it is the system through which you encourage your team to develop their skills and become better at what they do.

There's no 'right way' to do performance management – the best process to use is the one that best fits the context of your company.

You’ll need to think about questions like:

  • What type of feedback do we think is most important?
  • How often can my team devote their time to running these performance reviews?
  • What team behaviours do we want to inspire to boost performance?
  • How much extra work can I ask my managers to take on?
  • What type of progression framework can we build to decide who gets a promotion?

If you need some guidance with designing the best performance review system for your small business, you can read Charlie's free guide:

Click here to download our guide on career progression

Did you know that you can automate your performance review cycles with software like CharlieHR? Simply pick how often you'd like to run reviews at your company, and the system will send your performance questions to managers and direct reports to fill in online. No more chasing!

Also think about ways to support your team's L&D on a tight budget.

4. Codify the way you work with an employee handbook

Your company handbook is a collection of all your HR policies: it summarises how you work, what you expect from the team and what the team can expect from you.

Every aspect of working at your company should be reflected in your employee handbook, so that your team can refer to it every time they have a question.

For example, in your handbook you will include details about your annual leave policy: your team's allowance, how in advance people should book time off and what the process of requesting annual leave looks like.

If you’d like to learn more about how to create a company handbook, you can take a look at our free guide below.

Click here to download our guide on how to write a company handbook

Remember, the information inside your employee handbook is only ever useful when it’s easy to find and clear to understand. This is why we’ve made it possible to store and visualise your handbook directly inside Charlie's HR software. Now, you can give your team clarity on how your company operates in a place they can always find it.

Screenshot of what the handbook looks like integrated into the software

Of course, creating a handbook requires legal knowledge and experience you don't necessarily have. After all, with no experience and no training, it's hard to know what it should include.

That's when getting help from one of our HR professionals could be beneficial. With our in-house team, you'll collaborate with experts to produce a bespoke company handbook that reflects your ways of working.

5. Be prepared for difficult HR challenges

Everyone running a small business is going to face difficult HR challenges at some point. This simply comes with the territory of working at a small company – the conditions are more volatile than they are for large businesses, and working as a small team means you won't have access to an in-house HR professional with all the answers.

But that only makes it more important to be prepared for those moments. Delicate situations like raising performance issues with a team member, taking disciplinary action against an employee or even being forced to make redundancies… those situations bring you into contact with employment laws that a small business owner probably doesn't understand as well they need to. What's more, how you deal with those moments will have a huge impact on the morale of the rest of your team.

The good news is that it's entirely possible to prepare for those situations without having to bring in your own full-time HR team. Many small businesses choose to partner with HR support for small businesses like Charlie's HR Advice. You can get live, on-demand support from your own dedicated HR Advisor at a price your business can afford.

Cost of CharlieHR in comparison to the rest of the market - £299 compared to much more for others
Here's the cost of Charlie's HR Advice service compared to some of the other options on the market.

So perhaps if you're interested in HR advice, you should book a free call with one of our HR experts.


HR for small businesses shouldn't be overly complicated. It's all about starting from the basics so that you put solid foundations for your company to grow with as few hiccups as possible.

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