23 Jul What is HR and how can it help a growing business?
HR is Human Resources (or Human Resource Management). It’s concerned with getting the best out of the people who work for you.
Every time you add an employee to your business, that person can either contribute to the success of your business or to the failure of your business. They’re either adding value, or taking value away. Your business is reliant on how well the people you employ are working for you. HR is concerned with everything involved with getting this right. Good HR can help you get more out of the people you employ and thus help your business to be more profitable. HR also helps you to reduce the common risks associated with employing people.
Stage 1 HR: the Basics
Stage 1 of the HR journey is about getting the basics right.
Recruitment is always a bit of a gamble, even when it’s done well. Good HR helps maximise the chance of making a good recruitment decision, by using experience and drawing on research evidence to maximise the chance of making a good selection decision. This includes:
- head hunting (identifying and targeting people who are known to be good performers);
- the use of structured interviewing (using interview templates where each candidate is asked the same interview questions, which makes it possible to make fair comparisons between candidates); and
- by using behaviour-based questioning (because the examples that people provide about their past behaviours are good predictors of their future behaviours).
Good employment contracts include important clauses that reduce risk to your business in the event that something goes wrong. Good quality letters of offer and conditions of employment documents (which together make up a good employment contract) will present your business in a professional light. They also give you the opportunity to clarify pay rates and to get your pay rates right, which is currently a major problem for many businesses and a major HR risk that needs to be managed if you want to avoid costly fines and back pay.
These help make job expectations clear and reduce the opportunity for disputes. Position descriptions can also be referred to in the event of poor performance.
The Benefits of Stage 1 HR
By putting in place the basics, you increase your chances of hiring the right people, you make job expectations clear, and it makes it easier to deal with problems (such as poor performance) when they occur.
All good HR practices start with getting the basics right. The aim of this stage is to have an employee file with signed employment contracts and signed position descriptions for all employees. It’s the start of the HR journey.
Stage 2 HR: a HR System
Stage 2 of the HR journey is about implementing a good basic HR System, including policies, an induction system, a performance review system, and ensuring that all managers in your business have a good, basic understanding of employment laws.
A set of policies
There are a number of high risk HR areas that have the potential of destroying the value of your business, such as workplace bullying, sexual harassment, and breaches of confidentiality. HR policies help make expectations clear to all employees – they also educate employees on what is and isn’t acceptable within your business. They make it easy to deal with poor performance, poor behaviours, and to take fair disciplinary action when necessary. Common issues that occur in growing businesses that should be dealt with through policies, include:
- workplace bullying;
- sexual harassment;
- poor punctuality and excessive break times;
- inappropriate mobile phone use; and
- use of social media (including after hours).
Good induction systems help new employees get up to speed in short amounts of time. They also provide the opportunity to brief new employees on all of the policies of the business and to get their sign off. This clarifies expectations and makes it easier to deal with problems with performance and behaviour when they occur.
Providing employees with direction and feedback are 2 of the key skills that lead to higher levels of performance. One of the ways to apply these skills is to conduct annual performance reviews. You can read more about these here.
Annual pay reviews
Pay reviews shouldn’t be ignored, even if employees aren’t going to receive pay increases, or if the only increases they receive are due to annual changes to the applicable Award. Pays, whether they stay the same or go up should be talked about. Why? Because this is something that people think about (“when am I going to get a pay increase? And what do I need to do to get a pay increase?”). It’s one of the things that separates the good employers from the poor employers. It also helps decrease the chances of losing key staff. It’s just common courtesy to let people know, once a year, what is happening with their pays, even if their pay is going to stay the same (and to let people know the reasons for this).
Understanding employment laws
It doesn’t take much education for manages to develop a good, basic understanding of employment laws, such as:
- how to go through a fair termination process;
- probation periods;
- employment categories: casual, permanent-part-time, full-time, and the rules around each of these;
- how to manage poor performance (fairly); and
- the applicable Award, pay classifications, pay-rates and penalty rates.
The Benefits of Stage 2 HR
Stage 2 HR is about taking the next step in your HR journey, by putting in place a good, basic HR system. With Stage 2, all of your employees will be clearer about their expectations and managers will have a good, basic understanding of employment laws. This makes it less likely that you will have to deal with many of the common people problems that occur in organisations. And if problems do occur, you’ll have a system in place and informed managers, that enable you to deal with these problems.
Stage 3 HR: unlocking the potential of your workforce
Think about the field of HR. It’s all about people and at its best it’s about getting the best out of the people who work for you. It’s important to build good HR foundations (which is what Stage 1 and 2 HR is about), but once that’s in place, there’s a more exciting HR journey to take. In this article we discuss the invisible part of organisations. If you build this part of your business, it will help you to build profits.
Management training and coaching
The number one way to build the invisible value In your business is to work on developing people management skills, particularly with regard to providing employees with 1.) Direction and 2.) Feedback. We know, based on psychology research findings (and from our experience) that this builds performance. By building performance, you in turn build profits. You can read more about this here.
Identifying the skill gaps and training priorities in your business and then progressively working to close these gaps is another way that you can unlock the potential of your workforce. And this is not just about paid training programs. Often it’s about internal training and pairing up experts with novices.
Staff surveys are a good way to identify the state of the invisible side of an organisation, by measuring attitudes such as job satisfaction (morale), leadership, communication, and employee engagement. These concepts have a relationship to profits. So why wouldn’t you want to know the state of this part of your organisation?
By being clear about the critical positions and potential successors in your organisation, you can put in place systems for developing the successors in your organisation.
The Benefits of Stage 3 HR
Stage 3 HR is about getting the best out of the people who work for you. It’s about opening up your mind to the possibilities and the potential of your work force and developing the skills that will help you unlock that potential.