The HR essentials all startups must consider

Dakota Murphey
Business Growth Consultant
17th June 2022

Creating and starting your own company takes plenty of hard work, bravery and determination to keep things going, especially when it can take time for things to take off. Bringing your products or services to the masses is just the beginning, however, and you may wish to expand your company from a one-man band to something larger.

Even employing just one other person requires a company to establish its HR credentials to comply with the law. That reliance on HR only increases with the more people and employees you add to your blossoming company.

Nearly 5.4 million startup applications were filed in 2021, making it the most in any year since records began. With so many recent fledgling companies establishing themselves in the past few years, let’s look at the HR essentials that all startups must consider to help them achieve success.

Why is HR important for a company?

One of the biggest assets for any company is the people it employs. That talent is what can help drive a business forward, develop solutions to new problems and implement their expertise for maximum results. Companies that invest in their people not only create a stable working environment, they also nurture and grow their skills, which ultimately makes the entire organisation better.

Many startups rely on a flexible business environment, allowing them to adapt to industry and customer demands as quickly as possible. Maintaining flexibility is why creating an organisational structure, HR plan and recruitment strategy aren’t tasks at the top of the list for many startups or even established SMEs.

But there is a risk of creating toxic working environments through the confusion that can negatively affect employee morale and retention. For that reason, a newly-established business needs to consider its HR strategy sooner rather than later, so it can keep progressing rather than taking steps backwards.

Implementing HR practices to hire better staff

Finding the right staff is important in any company, but a startup has so few employees that every hiring opportunity matters. That begins with creating an inclusive and non-discriminatory job description and continues to the interview process.

Knowing how to attract the best candidates is important for expansion, so creating accurate and informative job descriptions makes all the difference. A startup looking for high-class candidates must showcase the levels of detail that those very employees would bring to their role.

Top would-be employees will want to apply for roles which utilise their best skills or cover an area of interest and will expect job descriptions to pay attention to detail and be written with careful consideration.

Employee compensation and benefits

Ultimately, people are going to invest in a startup if that company is willing to invest in them. When establishing a HR department, employee compensation and benefits are two of the most important areas to consider. HR should work with accounting to flesh out salaries and benefits while creating a link to ensure that potential employee payroll questions can be answered.

Most startups don’t make much money in their early years, the majority of businesses only turn a profit as late as year three, but employees will expect to be compensated adequately for their time. Together, HR and accounting can help to create a pay structure that works within the revenue of the business that provides competitive salaries to its employees.

Benefits are becoming more and more important to employees and they can be the deciding factor for candidates between one job and another. While some perks like remote working are great to have, other benefits like a pension scheme are legally required and companies must ensure they set these up for all employees.

Outsourcing HR

If you feel as though your company isn’t large enough to justify bringing a full-time HR professional on board, it’s possible to outsource this essential business activity to a third party.

For example, payroll is an essential requirement, but one that can be time-consuming and problematic for many businesses. Outsourcing this task to a specialist company not only ensures that a startup can dedicate its time to establishing and improving the business but also that everything is completed efficiently and accurately.

As your company grows you can add full-time HR employees as you see fit, however, you may also decide that outsourcing is the route you wish to take. Thanks to cloud computing and secure data controls, third-party HR companies can look after your logistical and administrative duties while you take care of matters closer to your expertise.

Safety, compliance and health practices

It is a legal requirement that an employer makes the workplace safe for any employees who may be there. This is an area of HR that can be easily overlooked as it requires time and resources to ensure everything is above board.

Many companies may struggle to justify putting such practices in place so early but the sooner a startup or SME does so, the sooner it will be ready to expand. Specifically, companies must have an action plan for medical emergencies, fire evacuation routes and maintaining a safe working environment.

Companies must also ensure they are non-discriminatory during their hiring process, which naturally extends to the employment of any staff. This can be done by creating policies such as equal employment opportunities and is a great way to bring the very best talent to your company. With a greater societal expectancy for companies to improve equality, diversity and inclusion, it's estimated as many as 35% of business leaders will prioritise this in 2022.

Managing documentation for audits

To protect themselves against fraud, businesses must ensure that they document all of their activities, expenses and transactions to ensure transparency during audits. It’s important to bear in mind when starting out that your business will be audited in the future. Taking careful steps to protect and ensure you comply with any potential audit involves preserving documentation and establishing defined policy information.

Companies can start to collect all of their data through forms, invoices and correspondences to ensure they are prepared for future audits. This organised approach can also help small business owners to stay on top of their finances and be ready for the end of the financial year.

As businesses develop, so too do their needs for solutions to their problems. A small business may be able to store all of its documentation in its original physical form in a filing cabinet but the more that business grows the more its admin grows.

Converting all of that paperwork through document scanning allows SMEs to save time and money by hosting all of their records in one easy-to-find location. Accessible from anywhere, and helping companies adhere to greener working solutions, better data protection and embrace remote working, document scanning helps with future audits too.

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