What Human Resources Are Vital For Building A Successful Business?Tuesday 18 May 2021
Nowadays, most business owners understand that HR is an important part of running an organisation.
And if they do, is it better to outsource the work or bring it all in-house?
This article will help answer these questions and point new entrepreneurs in the right direction when thinking about anything HR-related.
Don’t cut costs with HR
When you first start up your business, money is always going to be a limiting factor and you try to do as much as you can in the most economical way. Most of your money is going into your product or service development, and hiring an HR team or a lawyer isn’t always the first priority – even though investing in HR it should be, albeit on a more limited basis when you first set up!
When I first started my business, I had no idea about HR and the legalities of it! We did everything we could on the cheap at first, which a lot of startups and even some more mature companies do.
However, these days that is no longer advisable. You might be able to get away with it for the first few months, but after that you really need to make sure everything is in line.
When it comes to HR, you can’t just wing it any more. Unfortunately, we have become quite a litigious country, and HR has become a bit of a legal problem now which needs to be taken seriously. The HR law changes all the time so we need to be aware of these changes and keep our documents up to date in order to avoid problems down the line, just like we would with all the other legal details in our business.
So, what do we mean when we talk about HR, and what sort of things do we need to consider?
Hard HR: Outsourcing the complicated legal stuff
HR covers two sides of the business these days. Gary likes to split HR into two different camps which I think makes a lot of sense: hard HR and soft HR.
Hard HR is all of the bits you need to function as a business. This includes contracts, legal documents, employee records etc. You need to have all of this sorted out as early as possible and, because a lot of it is quite complicated, it’s probably worth outsourcing it in the beginning.
Generally speaking, the hard HR keeps you out of hot water in terms of employment and other key areas of the business by taking care of all the little laws out there – and there are many you need to get right!
If you don’t get it right, you could spend a lot of time and money dealing with different employment issues if they arise.
As an entrepreneur, dealing with these issues isn’t something you want to be spending your time on. You want to focus on bringing in customers and growing the business, so outsourcing your HR can take a lot of that off your plate.
Outsourcing the hard HR, in the beginning, is well worth the investment. It means you’ve got all the right legal documents in place, and are protected should the worst happen.
Bringing on the right HR outsourcing firm
Some HR firms out there will also take care of any legal action for you if you need them to do this, as long as you follow their processes and use their documentation. A great organisation that both Gary and I have used in the past is Peninsula.
The main benefits to using an outsourcing service like this are that, even though you are paying a monthly fee, most of their work is upfront and you avoid having to pay any large capital sum for a whole bunch of contracts.
A good HR outsourcing service can also be there to provide you with some really useful advice on problems you don’t have a lot of experience in. If you have a problem, and need someone to deal with it straight away, you can just pick up the phone and they can take that pain away.
So, outsourcing is a really good option for a growing company that isn’t yet in a position to hire a part-time or full-time HR expert.
Although you might be unlikely to go to tribunal or face any serious legal action, you will be glad you have a good HR outsourcing service to help you if you do.
Soft HR: The company culture
Another thing you want to be thinking about when it comes to HR is how you are working on your people internally.
This falls into the soft HR camp and, in many ways, is arguably more important than the hard HR stuff. The soft HR should be at the forefront of how you look after your employees, and it makes sure that everything is in place for them to do their jobs effectively. You need to think about how you are going to make your company a place where people want to work and show up inspired, whether that’s giving them the right equipment or just good coffee and fresh fruit!
That doesn’t happen overnight. It takes time to create an environment where people can be relaxed, creative and be their best, but it can yield some amazing results. This is the really positive side of HR, and whatever company I have been with, it’s something I have always considered to be vital to our success.
Building the right company culture for you
If you build the right kind of culture in your organisation, everything in your company will be positively affected, from staff retention to increased productivity and sales.
A good place to start with culture is to lay out your mission, vision and values. Then, you can set up how you go about celebrating success and how you go about treating each other.
In my previous company, I had different areas of the office where people could go and experience a different atmosphere. One place I had set up was called the “Cake Cafe” which had great, freshly ground coffee, comfy chairs, dry whiteboards and a TV.
Having things like this can really help improve your employees’ experience at work, and they are great examples of how soft HR can work.
The soft camp of HR isn’t something you can outsource: you want to build it up internally and have everyone on the team contribute to how it runs. You need to make sure everyone on your team lives, eats and breathes the culture you have created if you want to develop a high performing team, and that’s all part of setting up HR in the right way.
So, when looking into HR, the two things that entrepreneurs should focus on are:
- Outsource the hard HR and take it off your plate, at least during the early stages.
- Start thinking about your company culture and how you’re going to spread these soft HR skills throughout your organisation.
Invest in a good SASS product
When it comes to HR, I would also recommend getting yourself a good SaaS (Software as a Service) HR product. A well-made piece of software can really help you keep track of all the legalities around HR, along with all the simple things like next of kin phone numbers, addresses, etc.
This will ensure your records are organised and your employees’ data is being kept safe. These products will also allow you to share documentation online, invite people to events, along with a whole bunch of other services, so they are well worth looking into.
Do right by people
Although there are many legalities and technical parts of HR, fundamentally, it comes down to making sure you are treating people right. Sometimes people can get so worried about HR issues and become scared of having open, honest conversations with each other.
They get caught up in who represents them and what you can and can’t say, but a lot of the time, if someone has an issue, just have a straight conversation and do the right thing by them. If you do, you will find that they’ll usually do the right thing by you too!
As Gary’s old franchise lawyer once told him, “All you have to do is look someone in the eye and do the right thing.” A lot of the time, that can be enough, but in the rare case it’s not, make sure you have all the legal bits taken care of too.
I hope that was useful!
For a more in-depth discussion on EHE Capital and human resources, check out episode 14 of our podcast “Extraordinary Entrepreneurs Together”. Alternatively, you can email us with your questions at email@example.com.
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