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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 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 bringing in 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 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.

  • Put in place the 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 by clicking here.


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2. Craft your culture with an employee handbook

However, it’s worth bearing in mind that the legal bare minimum is just that – the bare minimum you can legally get away with. However, the most successful small businesses are built on a company culture that provides employees with everything they need in order to thrive and do their best work.

Building and sustaining a great company culture is a huge endeavour – but the best place to start is with an employee handbook (or company handbook) that's been designed to fit your business' unique context.

If you’d like to learn more about how to create a company handbook to supports and develops our company culture, you can take a look at our free guide by clicking here.


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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.

If you're already an admin on Charlie, you can take a look at Handbooks right now.

3. Give your small business good processes with the right HR software

  • 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 inside Charlie. Automated time off software allows you to totally remove yourself from the time off process. It will also calculate prorated holiday allowances and rollover for you, so you always know your time off process is fully compliant with the law.

  • 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 distil this messy and 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.

  • 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.

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

Today, the most successful small businesses are the ones that make growth and development a central part of their culture. There's a simple reason for this – employee performance is the single biggest factor in the success of your business. They provide the energy and momentum that drives your business forward.

What's more, creating a company culture that emphasises 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 level of documentation do we want to commit to?
  • How much extra work can I ask for my managers to take on?

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


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Inside, we've mapped out what we believe is the best performance management system for every stage of a small company’s growth – so you can build a company culture that encourages your team to perform.

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 a service like Charlie's HR Advice. With HR Advice, you can get live, on-demand support from your own dedicated HR Advisor at a price your business can afford.

Here's the cost of Charlie's HR Advice service compared to some of the other options on the market.
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