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HR Policies For Small Business Owners

hr policies for small business

Human resources policies are an integral component of any business. They ensure employees understand what their work expectations and standards should be while simultaneously protecting employers’ rights.

However, HR issues can take time and effort. Because of this, many small businesses delegate HR duties to an outside PEO.


Recruitment and hiring are core HR functions for any business, yet small businesses often struggle to manage this process effectively. It’s easy for a small company to miss critical details or make errors during recruitment or hiring processes which could result in costly errors that have an adverse impact on employee morale, performance and productivity.

Small businesses can improve their recruiting and hiring practices in many ways, including writing clear job descriptions, using candidate databases, creating interview scorecards, conducting background checks and using online employment application software. Furthermore, small businesses can save both time and money by marketing their jobs via social media and free job boards.

Small businesses can enhance their recruitment and hiring processes by using applicant tracking systems designed specifically to serve SMBs. Such solutions allow small companies to post job openings across various platforms while screening out unqualified candidates quickly, and also enable communication amongst applicants, recruiters, and HR specialists from one central point – saving time and resources in the process.

Small businesses should also implement policies to foster diversity and inclusion within their workplaces. This may involve adopting fair hiring practices, offering training opportunities and creating employee resource groups or affinity networks as ways to do this.


Finding and hiring top talent can be an enormously time-consuming challenge for small business owners who often wear many different hats. From strategic oversight to day-to-day HR paperwork, finding time to concentrate on all these responsibilities can be challenging.

Employing some key HR policies can help your company reduce employee turnover and streamline the onboarding process, including providing new hires with a comprehensive checklist, as well as outlining clear guidelines to make sure everyone onboard understands how their managers will conduct themselves in accordance with company culture.

An effective onboarding process sets employees up for success in their new roles, helping you retain them for the long term. A smooth onboarding process also reduces errors caused by confusion during onboarding, saving both parties money in terms of costs associated with unnecessary mistakes made due to lack of clarity.

Onboarding starts by reviewing and signing off on the company’s employment policies with new hires, whether that is done during orientation or separately.

Your company should also provide employees with an employee handbook outlining its policies and procedures, the W-9 form for contractual workers and an emergency contact sheet as important documents. Depending on their benefits package, employees may also need a list of what benefits are available before filling out a form with which benefits they’d like to avail themselves of.

Performance evaluations

Evaluation employee performance can be intimidating for small business owners, but with proper implementation it can help increase productivity and morale at your organization. A sound performance evaluation process also provides fair compensation packages; and provides you with an opportunity to identify areas for individual employee improvement as well as set future goals.

Your employee performance evaluation process can take many forms and criteria. A standard rubric may help, but remember to also take account of each employee’s unique strengths and weaknesses when conducting assessments. Seeking advice from other businesses regarding the most efficient performance review procedures may also prove helpful.

Your business should conduct more frequent performance reviews in addition to its annual evaluation, in order to address issues quickly and improve overall quality of work, employee satisfaction, and retention.

To optimize the effectiveness of your performance review process, it’s essential that employees know exactly what to expect. Supervisors should also be honest and forthright in their assessments; if necessary, consult a professional employer organization (PEO).


All businesses must hire and fire employees at some point, whether due to poor performance or during economic downturns when business may decline and it becomes necessary to lay off employees. Either way, it’s essential that when terminating employees they adhere to an agreed upon set of procedures; this will protect both the company from legal problems as well as any negative publicity and protect itself from public relations disaster.

Establishing HR policies may seem cumbersome and time consuming for small businesses with low employee turnover, but taking the time to develop these procedures and policies will save your company from future headaches. From lawsuits related to unfair termination or accidental breaches of confidential data to employee issues such as sexual harassment claims or workplace injuries, an effective HR policy will protect against potential liability issues.

Terminated employees should be informed in a private meeting with either their HR manager, company owner, or another member of senior management. Preferably this meeting should occur face-to-face and in an environment without distractions; having witnesses such as company lawyers or supervisors present may also help. Once termination has taken place, any necessary paperwork as well as their final paycheck (depending on state laws) should be given immediately or provided later that business day or pay period.

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