Most entrepreneurs need support to handle workplace challenges and issues – particularly with employees.
Although great misperception, among many small business owners about a need for formal human resources strategy exist, any business can benefit from putting appropriate HR systems, processes and policies in place.
Even if you employ just one to two people, they are pillars on which you build your future success. As a business owner, you should see the employees as partners in the growth of their company. A key component of HR is about maximizing your returns on your investment on your employees while reducing the risks.
A company’s employee base is its most valuable resource, according to conventional HR wisdom and theory; therefore, HR planning and development are essential to gaining a competitive advantage ahead of industry counterparts. As a large organization, these competitive advantages can appear in the form of recruitment initiatives, alternative work schedules and fair compensation and benefits. These factors can also be a competitive advantage for small businesses who may have limited capital by them choosing more creative ways to reaching qualified candidates to become part of their teams.
Turnover within any business is costly. “According to Right Management, a talent and career management consulting firm, it costs nearly three times an employee’s salary to replace someone, which includes recruitment, severance, lost productivity, and lost opportunities”. As a business owner, the time you take away from working on your business to hire someone should be a recognized cost to recruiting. Consider your current hourly rate and the number of hours spent recruiting and training a person to join your team.
As an example, Joan decided to grow her team and recruit an additional staff. As part of this process she had to define the role for her new person, determine a competitive salary, share and upload the job description to different platforms in which those seeking employment presently use to apply for jobs. After receiving inquiries to her job posting, Joan then had to schedule time to interview the potential candidates for her staff role. Once she selected the person best fit for the role, she had to outline an on-boarding process to ensure the new staff was clear on the role, expectations and the company’s mission and goals.
Oh, my gosh! This is no quick process to complete, right! Let’s do a quick estimate of time Joan dedicated to this process versus using this time to work on her business which includes scheduling and meeting with potential and current clients.
If Joan’s rate per hour is $800 and she spent an estimate of 23 hours completing this task of recruiting and hiring, it cost her $18,400. This amount is not considering the many occasion’s Joan may have had to answer phone calls related to her job posting or the number of potential candidates she had to meet. Statistical Research by Life Work Solutions, a provider of staff retention and consulting services has shown the following:
- Over 50% of people recruited in to an organization will leave within 2 years.
- One in four of new hires will leave within 6 months.
- Nearly 70% of organizations report having difficulties in replacing staff.
Thus, the question to maximizing in your business with HR policies begins with implementing a clear development plain for retaining good employees and keeping the turnover rate low. Recognize that what attracts a candidate to a job is often different from what keeps that person there. Start with communicating. No matter what the size of your business, communication is central to building and maintaining credibility. One of the easiest ways to communicate is through the development of HR policies. Employees need to feel valued and appreciated, provided with growth opportunities and have trust and confidence in their business leader’s goals and mission.
It is never too late to implement HR policies for your business. If you are a small business just getting started we encourage you to think about the future of your business. What will be your ideal structure, benefits and competitive edge within your business. These are the key factors from the beginning that will attract the ideal candidates for your business.
Don’t wait until you need an employee before you clearly understand who that ideal candidate is. Keep cost low and start developing your ideal employee now.