HR for Small Business: What You Need to Know

When you work in HR for small business, it’s pretty standard to have a lot on your plate at any given time. You’ve probably come to expect it. There are a lot of moving parts for you to keep tabs on, and you’re determined to handle each and every one of them with excellence—and for that, we applaud you. Beyond tipping our hats to the hard work you put in, we have some strategies to help make your job easier and even more effective.

As an HR professional in a small business you get to be involved with multiple aspects of the employee life cycle and help influence your team members’ satisfaction. Your role is much more than the sum of its daily tasks, like running payroll, filling out forms, and administering compliance training. You help shape the experience of employees throughout their time with the organization.

We’ll look at key aspects of your role, including:

• Recruiting
• Compensation
• Compliance
• Performance & Engagement
• Culture
• Learning & Development
• Analytics & Employee Satisfaction

Let’s dig in to understand how your responsibilities influence the big picture of employee experience.

When recruiting, the longer it takes to fill a position, the more time and money your organization will need to spend on the recruiting process. It’s no wonder that recruiters and employers want to speed up the process by making their organizations as attractive as possible while retaining the employees they fought so hard to bring on board.

Where organizations run into trouble is when they rely on recruiting techniques that make special cases for individuals or groups, ignoring long-term realities for a quick recruiting win. Recruiters might decide that a high salary will lure in hard-to-find candidates for niche positions or will make the difference for a choice candidate with multiple offers.

These tactics might seem helpful in meeting recruiting goals on time. But they come with several undesirable consequences. Employment and compensation isn’t just a one-time deal revisited every other year—it’s an integral part of the employee experience, one that more and more people are sharing with their friends, co-workers, and the world at large.

As coworkers compare notes, they will discover any salary disparities. If a new employee receives a similar salary without the same experience level or qualifications as their coworkers, then your current employees are going to question the value your organization places on their experience, not to mention their potential for future growth.

This effect is known as salary compression, and it decreases employee satisfaction and engagement. As employees discover that their compensation compares unfavorably with their coworkers’, they start looking for a job that will pay them what they feel they’re worth.

It’s important to fill positions quickly. It’s more important to align the candidate’s salary expectations and contributions with the long-term reality of their new position. Defining a salary range for each position will help ensure that the employees you hire have room to grow and develop in a way that matches their career path. This care in hiring helps you hire employees who stay, instead of replacing hires who leave after a few weeks or months.

1. Develop Your Compensation Philosophy

Every compensation plan needs a philosophy, which is a statement that outlines the high-level goals that your organization is looking to accomplish with its compensation budget. A compensation philosophy clarifies to your employees what your company believes in, what values you hold dear, and what you’ve chosen to reward.

2. Define Your Compensation Strategy

A defined strategy will answer these questions:

• Which talent market(s) do you compete in for talent?

• How competitive do you want to be with rivals in your talent market?

• What do you want to reward? Tenure? Performance? Specific skills? A combination of these things?

Talent markets are defined as the combination of size, industry, location, and organizational type that you select. The market you select should reflect where you compete for talent, not necessarily where you compete for business.

3. Perform Salary Benchmarking

Step 1: Select sources of salary market data

Ideally, you’ll want to have at least two to three data sources to work from to guarantee the accuracy of your results, including:

• Published, traditional surveys
• Crowd-sourced data
• Custom surveys

Step 2: Choose positions to benchmark

When selecting your benchmark jobs, start with those positions that are standard across different industries. Next, choose industry-specific positions that are standard at your company compared to positions in other organizations within your industry. Avoid using positions that are a blend of two or more positions. Don’t force matches to market data for non-benchmark positions.

Step 3: Weigh your data

If certain sources are more accurate, you want to make their data have more influence over the final salary range you come up with. You can weigh different sources based on a position-by-position basis.

4. Develop Pay Ranges

Pay ranges are guidelines for paying people based on the market value of their jobs. Pay ranges also help smooth out daily or monthly market fluctuations and set upper and lower bounds of possible pay. The market value approximates the midpoint of the range. Typically, you’d bring people into a job at or near the minimum of the range and as they gain skills and experience, they’d move up the range. Essentially, you pay people at the market rate once they’ve demonstrated their value.

For smaller organizations, creating job-based ranges may be best. Job-based ranges provide a minimum, middle, and maximum pay for each job in each geographic location. They are built around the market value for the job.

For more information on how to build a grade structure, check out this webinar.

5. Update Compensation Policies

Compensation policies ensure your comp plan is carried out as intended. This includes things like how often you will review salaries, how you give raises, what you expect managers to do in the salary increase process, and what the timeline is for salary increases.

6. Clarify Processes

Last, you’ll want to specify processes or the tactical steps you want the organization to follow. For example, how do you handle requests to do ad-hoc reviews of jobs? How do you work with managers when they request that their direct report get a raise? When can employees expect to see increases?

It’s no secret that employee engagement is a major key to the success of any company. When you truly engage your people, it creates a ripple effect that touches every part of your organization. Loyal employees give their best, which helps provide a better customer experience and ultimately leads to an increase in profitability. But if businesses worldwide are finally in the know, and employee engagement has become an ubiquitous buzzword, why is it that only 33 percent of the US workforce is currently engaged?

Engagement is complex, but a people-first attitude can give your organization a creative edge, attract top talent to your employer brand, and most importantly, make the difference between surviving and thriving.

HR can take steps to help everyone in the organization take responsibility for employee engagement by training managers in soft skills, by providing the executive team with insight on strategic decisions, and by encouraging all employees to look out for the well-being and inclusion of others.

How to Engage Employees

Every organization has a company culture, much like every city has a vibe and every human being has a personality. But the intangible nature of culture can make it seem difficult to discuss, much less create, implement, or maintain. If all is done right, it’s a “feeling” that becomes the guiding principles in the day-to-day of a company.

But a successful company culture doesn’t arrive spontaneously; you have to build it with intention and give it purpose. The most successful cultures feel natural, but in fact they are the result of lots of hard work by leaders and stakeholders to define and reinforce the company’s core values, mission, and vision.

The role of HR and upper management is to get buy-in from the employees and to inspire them to live the culture every day. First and foremost, this starts by setting the example—living and breathing the values, in other words—and then letting it trickle down.

Where can we see company culture in action?

• Actions and patterns of behavior
• Words and language
• Work processes
• Customs and practices
• Expectations
• Norms amongst employees
• Common values and goals

What are the benefits of investing in company culture?

Steering your people in a common direction towards shared goals fosters a sense of connection, purpose, and belonging. Consequently, this increases both job performance and engagement across company teams.

Moreover, with a defined culture, recruiters can more easily hire for culture fit, bringing in talent that fits the needs of the team on a human and professional level. Likewise, a positive company culture is what attracts people to organizations in our modern workforce. It’s the heart of things, and it’s what keeps employees committed to your brand.

What are some elements of company culture that drive engagement?

• Attitudes of trust
• Transparency
• Vulnerability and authenticity
• Learning and development
• Autonomy
• A bottom-up leadership approach
• Inclusion

When it comes to training within a small business, modern learning methods are absolutely your ally. Beyond compliance training, you can use off-the-shelf content to easily offer self-directed learning opportunities to everyone in your organization.

In-person training is valuable for some aspects of learning, but you can give your organization a strong competitive advantage with three additional components of learning and development: a robust online training content library, a learning management system, and training consultants to help you put it all together.

A robust training content library should have content covering:

• Compliance
• Communication
• Business skills
• Leadership and management
• Sales and service
• Workplace safety
• IT and software

Building a content library gives you the materials to create training courses in a learning management system. Instead of spending time giving live training and tracking paperwork, you can handle hassle-filled tasks like compliance training in a single, online location.

Of course, providing an online library isn’t the be-all and end-all of training. Your courses—whether online or in-person—need structure in order for employees to put it all together. Working in HR for small business often means you’re already wearing many hats, so a training consultant can be an invaluable partner in unlocking the full potential of your learning management system. A dedicated consultant can help you identify ways to blend training methods with practical, on-the-job exercises that let your team retain learning and apply it with ease.

Your employees are looking for a chance to learn. Especially in a small business, providing modern, engaging, interactive learning opportunities will help your employees connect with their roles in deeper ways and improve their relationships with each other and the organization.

There are countless ways that HR for small business can help the people of your organization achieve its objectives. Understanding principles like compensation, culture, learning, and engagement is the first step. But what do you do next? What changes will provide the most benefit for your organization?

All of them, you might think. Unfortunately, you can’t transform your organization overnight, even if you rewrite every policy and get executive approval to do so. Change in your organization won’t happen until your people change, and changing attitudes and behaviors takes more than an announcement or a single training session. To reach your people, you need insights into what they’re thinking and why they’re thinking it. You need to gather and analyze HR data.

A recent study from BambooHR and HR.com found that while 58 percent of HR professionals said that understanding and using HR data was very important, only 16 percent thought of themselves as experts in using that data.

If you’re new to HR analytics, eNPS surveys can be an excellent starting point. The eNPS survey method consists of two questions (with all responses confidential):

• How likely are you to recommend your organization as a place to work (on a scale of 1-10)?

• How could we make our organization a better place to work?

The first question divides responses into promoters (employees who responded with 9 or 10), neutrals (7 or 8), and detractors (6 or less). The final eNPS score is the percentage of promoters subtracted by the percentage of detractors; neutrals are removed. Getting a positive score is the first victory, as it shows that your organization has more actively engaged employees than actively disengaged employees.

The second part of analyzing your eNPS survey is your employees’ responses to the second question. To make this quicker, find an eNPS tool that helps you make sense of them by filter and organizing these responses. For example, BambooHR® Employee Satisfaction with eNPS® gives you your score, how that score is trending over time, and searches through responses to give you your employees top five likes and dislikes—and that’s on top of filtering responses and tagging them according to topic.

Reading responses broken down by common themes and groups within the organization lets you uncover areas where your company does well and where there are issues that could be resolved. Consider the following when reading through responses:

• Do most of your promoters praise your culture?
• Is there a consistent theme among your detractors?
• Are issues concentrated in one division or department, or spread out across the entire organization?

Presenting these findings to your organization’s leadership can start conversations about ways to improve employee satisfaction and engagement, and further surveys will allow you to gauge and track the effectiveness of your cultural initiatives.

HR data doesn’t have to be intimidating. Exploring the context of your employees’ experience with the right tools can lead to some exciting insights, not just for HR professionals, but for other decision makers in your organization, too. And every time you repeat the process you gain a better understanding of the impact your culture strategy is having on your organization.

Your organization may be small enough right now to handle all of these responsibilities without HR software. But if one of your goals is to grow, your responsibilities won’t stay manageable without a helping hand from technology. HR software carries some of the extra load that comes with more employees and more organizational complexity, so you can focus on helping your people and your organization reach and exceed their goals.

*Net Promoter, NPS, and the NPS-related emoticons are registered trademarks, and Net Promoter Score and Net Promoter System are service marks, of Bain & Company, Inc., Satmetrix Systems, Inc. and Fred Reichheld.