HR for start-ups – how to get it right

Alison King outlines the key human resources considerations for small business owners starting up

Starting your own business is an exciting time, but it’s also busy and the focus is typically on your product and service. Thinking about HR and your new employees can often take a back seat. Yet this is an element for start-ups you can’t afford to ignore – for the sake of your business, its culture, and long-term success.

In the early days, it’s easy to fall into the trap of forging casual and informal relationships with staff. This often works well at the beginning. But as the business grows these relationships should develop on a more formal basis. This is why it’s important to think about HR from the outset. What sort of approach you will take, and what are the essentials you need to get in place?

To avoid any pitfalls, you should set out your HR strategy to include:

Recruitment

Recruitment will play a huge part in your business growth plans, which means you need to have a robust recruitment plan. Sounds obvious, but recruiting the right people is essential. On average it costs around £3,000 to hire a new employee. Hiring the wrong people, for the wrong reasons, will end up costing you time and money further down the line. It’s a good idea to review your recruitment process every quarter to understand where you are and if it needs adjusting.

All too often, time-strapped start-ups will tend to hire a family member or friend to avoid spending time sifting through CVs. You need to find someone who has the right mix of business skills and acumen and who will complement your team. You will be working long hours together and will need to work well on a professional level.

Analyse what you need from potential employees – what are the skills, experience, and motivation you will need to help you run your business? Create a clear job description, this is your basis for everything, from adverts to performance, motivation, and retention. This will help you work out what skills and experience the right candidate will need.

Essential policies

Once the business is established you can introduce a suite of policies to protect it. At the very least you need a disciplinary and grievance policy and procedure that details how you will manage complaints, disciplinary issues and terminate an employee’s employment if needed. Other policies you could consider are family friendly policies, a code of conduct, and some form of attendance at work policy to include all reasons why they may be (or not be) at work. Again, this sets out fairly and consistently how you will manage questions, issues, and requests and help you to set expectations.

Employment contracts

Before you recruit your first employee you should ensure you have a legally compliant contract of employment. Getting this sorted from the outset will avoid confusion and ambiguity for staff as the business grows, protect your intellectual property, confidential information, and restrict staff activity after they have left your business.

When you take on an employee, you are legally required to give them a document which states their main conditions of employment as soon as they start work. Generally this would take the form of an offer letter and contract.

The principal statement is given on the first day of employment, and the wider written statement within the first two months of the start date.

The principal statement should include:

  • The business/employer’s name
  • The employee’s name, job title, or description of the work and start date
  • Rate and frequency of pay
  • Working days and hours (and if they vary)
  • Holiday entitlement (and whether this includes public holidays)
  • Location of work and whether this will vary, including addresses
  • Length of probation period and dates
  • Length of job (and the end date if it’s a fixed-term contract)
  • Details of any benefits
  • Obligatory training and details of who pays this

On the first day, you are also required to provide the employee with information about your company’s sick pay and procedures, other paid leave (such as maternity and paternity), and notice periods. You can choose whether to include this information as part of the principal statement or in another document that they can easily access.

When it comes to the wider “written statement”, this needs to include:

  • Details of pensions and pension schemes
  • Collective agreements (this is an agreement between employers and employee’s representatives, such as trade unions)
  • Rights to non-compulsory training offered by the business
  • Disciplinary and grievance procedures

>See also: Varying employee contracts: the law

Payroll

Another important consideration is how you will manage payroll. This means paying your staff the right amount each week or month and deducting tax and national insurance contributions. You can manage this yourself or you can outsource this to a provider. Remember you are legally required to pay your employees, produce pay statements, and manage PAYE and national insurance contributions plus auto enrolment into a pension scheme. Failing to manage this properly can have massive consequences for a start-up.

Training

A good training plan is essential to develop, motivate and retain your staff. Once you have got a new team in place, you need to know what they are doing, and if not, that you have spent time training them on using equipment, dealing with customers, ordering stock, or following processes. Don’t assume that they know and that they will pick up what to do. Set out your expectations and standards. And provide training and information to give staff the best opportunity to succeed.

>See also: Employee wants to convert SSP to annual leave

Involve employees

Ultimately, you want engaged employees who are informed and motivated. Those people will look after your business even when you’re not there. Consider what business information, strategy, and updates would be helpful to engage your team and offer them clear goals so that they know what their priorities are. You should aim to build up a culture of trust – employees are more likely to do things for leaders they believe in. Involving your employees in decisions and listening to them will all help.

Getting HR for start-ups right

No matter what type of business you own, it’s your people and your strategy that will define and differentiate it. Identifying your core values and how you will lead and inspire your team is one of the key drivers of a business and having the opportunity to paint that onto a blank canvas is exciting. Getting this right from the start is essential, but once you have ticked off all the essentials, you will start to build a vibrant culture, with a motivated team and a profitable start-up business.

Alison King is managing director at Bespoke HR

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