Managing personnel is as important for a small or medium enterprise (SME) as it is for huge global corporation. Maybe more so, as there is less room in small company to hide underperforming or poorly-prepped employees.

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Most SMEs need to be more energetic, efficient and nimble than bigger competitors. Recruiting, retaining and getting the most out of staff is thus crucial to gaining an edge over rivals.

No dedicated HR department

The problem for many small businesses is they don’t have the human resources (HR) capability of bigger enterprises but still need to build a staff with a level of skill, productivity and flexibility that will keep them ahead of flabbier corporate giants, as well as other SMEs.

In fact, many SMEs don’t have any person in an HR role at all. Research by the Chartered Institute of Personnel and Development (CIPD) reveals that just 29% of micro companies (under 10 employees), only 47% of small businesses (10-50 staff) have even just one person in an HR role.

Make someone responsible

Just because a company doesn’t have a full-time HR director/manager/officer, however, doesn’t mean it cannot be efficient, ambitious and progressive in its handling of personnel management. There are ways to get ahead of the game and implement best practice HR, even if you are a relatively small firm.

The starting point for many small businesses is to designate a senior person within the firm as responsible for HR. It should be someone in a position to make decisions, such as the managing director, the finance director or a partner in the business.

It should then become part of that person’s job to ensure that that administration and development of employees becomes a key focus of the business.

Assume the right responsibilities

There are a whole range of responsibilities that need to be taken on by this person – many of which involve legal requirements and essential functions of a business. Here are the most important:

• Recruitment: This is critical to the HR role in any business and entails developing a process for finding and attracting the best talent the business can afford – overseeing everything from the creation of job descriptions, to adverts for vacant roles, to the screening of applicants, to interviewing, to offer letters, to on-boarding of new staff.

• Contracts: Once and employee starts they have legally accepted the terms and conditions of the job offer, but most are legally entitled to a written statement of the these (including matters such as pay, working hours, overtime, sickness, notice periods and holidays) within two months of starting work. Someone has to make sure this is done.

• Payroll: This is another area of HR with a number of legal requirements that has to be properly managed, so that payment amounts, tax deducted, national insurance contributions and pay slips reflecting these are all done correctly and on time. This has to be set up and run.

• Training: First of all, it is critical to ensure employees are properly trained in their job and the overall operations of the business. This includes internal processes, the use of equipment, dealing with customers and other critical operational functions. Secondly, it can be vital to the success of the company – and for the retention of top employees – to provide further training to develop their skills and provide new qualifications.

• Benefits: It is necessary to track and manage any benefits provided by the company, which can include pensions, disability insurance, health and dental coverage, travel loans, childcare vouchers, and maternity leave and pay above statutory requirements – and a host of smaller items such as bicycle-to-work schemes, free snacks and company-paid massages.

• Health and safety: An employer has a legal responsibility to keep staff safe and take steps to minimise and risks at work. The HR ‘responsible person’ needs to put together a written health and safety policy, make sure employees are aware of it, ensure any other regulations are complied with, and stay current on any new legislation or rules.

Keep the staff management function organised

For the smooth running of the company, it is necessary to keep a certain amount of paperwork and reporting going. It’s not fun or glamourous, but it is vital to the effective operation of any business and will be a big part of what designated HR director/manager/officer has to do.

This means tracking and ensuring proper management of sick days, holidays, pay changes, bonuses, appraisals and other ongoing elements of personnel management. The HR person in the business also has to maintain confidential employee files with records for each staff member. These files can contain contact details, salary, absences, annual leave days, professional qualifications, working papers (where necessary), any disciplinary actions and changes in any of these.

If you do handle HR in a small business, to help keep things ticking over and minimise the extra work, you can produce a staff handbook. This can set out things such as office procedures and rules, workplace expectations, company benefits, health and safety requirements, training opportunities.

The other shortcut to more effective HR management is an application such as SMB.co.uk, Staff Squared or RedSpot HR – all of which are designed specifically for SMEs. These apps enable you to manage, via the cloud, staff recruitment and on-boarding, personnel records, training, performance appraisals, payslips, reporting and other HR functions.

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