The Four HR Essentials for Growing Businesses
Whether you already have established human resources (HR) operations in place, or you’re launching a new business and need to develop your HR plan from scratch, here are the four critical steps for developing an HR framework that will support your success and continue to help your business grow and scale.
Four Steps for Developing an HR Infrastructure and Framework
1. Create a Clear Staffing Plan – What type of workers do you require, how many, and when do they need to start?
Think about your workforce needs, such as positions you need to fill and when you will need each new hire to start, over the next six months to one year. Then calculate time estimates for how long it will take to recruit and hire for these positions – start working backwards to plan your recruiting timeline to ensure you don’t miss your hiring deadline. Finally, you’ll need to create job descriptions for these positions in compliance with the Fair Labor Standards Act (FLSA). You’ll also want to ensure these job descriptions are accurate and attention-grabbing so you can attract top talent.
Here are a couple of questions you can use to help you get started drafting effective job descriptions:
What are the expectations, skills required, and responsibilities for each role? Be as exact as possible!
What would your ideal job candidate look like for each position?
How are your competitors describing similar job openings, and how can you stand out?
2. Develop a Compensation Strategy – What are fair and competitive pay and benefits for attracting top talent?
Once you’ve identified what positions you need to fill and outlined a recruiting and hiring execution plan, you need to either revise or create a competitive compensation structure that includes both cash (salary, wages, etc.) and non-cash benefits.
Here’s three steps to help you develop an effective compensation strategy:
Define Your Compensation Philosophy: Identify how your compensation strategy will align with your company’s values, strategic goals, and vision. For example, will you simply meet the supply and demand for compensation or will you strive to pay higher than others in your industry?
Conduct a Salary Market Analysis: Use surveys and other data sources to define the market value of roles in your organization. A few examples of data sources include job boards (Indeed, LinkedIn, Glassdoor, etc.) or public wage data from the U.S. Bureau of Labor Statistics.
Design Your Compensation Structure: Based on your research findings, determine compensation grades and salary ranges customized to your business. It’s important that these numbers help you compete for talent and fit within your budget. Consider if you will pay above, below, or match market rates, specific benefits you will offer (cash and non-cash), and if your compensation structure is fair and in compliance with local laws and federal regulations.
3. Build Out Your Overall HR Budget – How much do you need to spend to manage your human capital?
Now that you have a staffing plan and know how much each role will cost, it’s time to develop a budget. This step is essential for maintaining profitability and ensuring the costs of the previous two steps, and other HR operations, don’t disrupt your bottom line.
Work with your Chief Financial Officer (CFO) or accounting department to develop an HR budget that includes:
Employee salary or wages
Benefits and perks
Employment taxes
Workers’ compensation insurance
Employee training and development
Recruiting expenses
Company culture needs
Ensure this budget is detailed and covers all of your HR operations – taking every cost and expense into account.
4. Upgrade Your Payroll System – Are you paying and managing employees in the most efficient way possible?
Regardless of if you already use a basic bookkeeping system in your company or not, as your workforce grows it’s advisable to use a technological solution that’s both scalable and can expand in its functionality. A good payroll system saves time and streamlines HR workflows to simplify the process of paying employees in a timely, accurate, and compliant manner.
Find a payroll software that allows you to begin with the basics and then enhance and expand your services as needed – calculate what you need and when you will need it.
Establishing a successful HR framework that will allow your business to continue to scale and grow involves navigating and implementing these four essential steps – creating a clear staffing plan, developing a compensation strategy, crafting an overall HR budget, and upgrading your payroll system.
Integrating these HR infrastructure essentials into your business, whether it’s new, developing, or established, will help you optimize talent management, support your business objectives, and drive sustainable growth.
To learn more about HR infrastructure and the other HR basics and fundamentals for growing businesses, click the link below and be redirected to our homepage – scroll to the very bottom right to download our HR Toolkit for Growing Businesses!