Building an HR Foundation: Paving the Way for Small Business Success

Taking the leap to bring a business idea into fruition is one of the most admirable characteristics of small business owners. Part of the process to becoming successful is building a foundation for human resources, one of the most challenging aspects of running a business.

Below are some key human resources areas to consider.

Organize an Approach to Hiring

Determining the positions and skill sets you need as well as where to source applicants is important, as is having a plan in place once those resumes begin to arrive. For those applicants you intend to interview, have an application that has been legally reviewed for them to complete. Applications, unlike resumes, require the applicant to attest to the work experience they are providing in addition to giving permission to verify their experience. Prior to the interview, determine what questions you want to ask, and ask them consistently for all the applicants you plan to interview. The questions should not be discriminatory, such as “How many children do you have?” or “Have you had any past injuries?” Include questions like, “This job requires the ability to make quick decisions under high pressure. Tell me about a time in your current position where you found yourself in this situation.” This type of question should open up a dialogue between you and the applicant so that you can have more of an insight into the applicant’s work ethic.

Establish an Employee File System

When it comes to managing the documents of your workforce, keeping everything in one file is not a recommended method. Certain federal employment laws require the separation of documents. For instance, I-9 forms, the forms that prove an employee’s ability to work in the United States, must be filed separately from the employee’s file. Other information like workers’ compensation claims information, investigative documents and enrollment forms for benefits should be kept out of the employee’s file as well. Also, any resumes or applications you have from those individuals you did not hire should be stored for at least a year from the last date of human resources action (i.e. date of last interview). The purpose of this practice is not only to maintain compliance with laws such as the Americans with Disabilities Act and Title VII of the 1964 Civil Rights Act, but to also help defend against discriminatory claims. You may want to check with your legal counsel as to whether a longer retention schedule is recommended.

Develop Proper Pay Practices

Conducting your due diligence as to how you intend to pay the potential employee and what pay records need to be kept is critical. The Fair Labor Standards Act (FLSA) is a federal law that presides over how employers have to pay their employees. It establishes what records need to be kept and which employees are due to be paid overtime. The Department of Labor’s website ( has a wealth of information as to what the law stipulates in addition to handy tools for employers. For instance, the website has an Overtime Security Advisor that helps employers decide whether or not an employee should be paid overtime. If that employee needs to be paid overtime, the website has another tool to show you how it should be done. Although the FLSA is a federal law, your State may have laws that impact how overtime is paid, so it is important to do your research on a state level too. Seek the advice of your legal counsel if you are unable to clearly determine whether or not the employee should be paid overtime. Wage and hour claims or lawsuits are extremely costly, so prior proper planning can help to prevent this expenditure.

Communicate Company Policy

Having a handbook is extremely important to document and communicate company policy. It can help set the expectations for employee conduct, absenteeism, dress code and time off. However, handbooks should always be legally reviewed. State and Federal employment laws may impact the wording of your policies. If you have a management team, they need to be familiar with the handbook and manage in accordance with those policies. A common pitfall is when actual practice differs from policy. Once the handbook is in place, take the time, at least on an annual basis, to make any updates along with assistance from legal counsel.

As a small business owner, the main focus of your day to day is to channel your energies toward growth and profitability. Directing part of that focus toward the human resources aspect of your business is vital. Should you need additional support in this area, outsourcing services are available in addition to your chamber of commerce and industry specific organizations. Setting the human resources foundation as early as possible will not only ease the task of employee management, but also help guide you along the path of success.

Linda Martin
<p> Linda is a consultant for Paychex Inc.’s human resources outsourcing division that provides on-site HR support, from employee management, to HR compliance, payroll, benefits and training. Prior to joining Paychex, Linda worked as a recruiter and a human resources manager.<br /> <a href="" target="_blank"></a> | <a href="" target="_blank">Facebook</a> | <a href="" target="_blank">@Paychex</a> | <a href="/author/linda-martin/all-posts" target="_blank">More from Linda</a></p>


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