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By Jessica White

 Many small businesses believe they are too small to worry about human resources and legal compliance. However, even businesses with one employee have responsibilities in these areas. Proactively establishing policies and procedures and ensuring legal compliance is the best way to prevent problems from occurring. In order to do so, there are a few things every business should know:

1) Independent Contractor or Employee? While it may seem ideal to hire Independent Contractors, there is a downside to this arrangement. Because the law defines Independent Contractors and how they must be treated, businesses cannot control a Contractor’s work hours or provide the work direction they would with an employee. In addition, there are serious financial consequences for misclassifying workers as Independent Contractors including unpaid taxes, Unemployment, and Workers’ Compensation.

2) Job Descriptions. Written Job Descriptions should be created for each position. They help advertise the position, choose the right candidate, ensure a consistent understanding of the job, and evaluate job performance. Well-written descriptions summarize the job duties; describe the work environment and physical requirements; and list the required experience, education, and technical skills.

3) Hiring. To hire the right person, businesses must not only find the person with the right qualifications but must also ensure the person will be a good fit. Most people resign because of a poor fit with the boss or company culture. Discuss the company culture and goals, team dynamic, and management style with each candidate and consider how the person would fit before making any hiring decisions.

4) Employee Handbook. Handbooks include policies on many topics such as attendance, paid time off, computer and internet usage, and dress code. They help the business communicate expectations and provide a framework for addressing employee relations issues. Because every company has its own culture and needs and because legal requirements regarding Handbooks vary, Handbooks should be customized.

5) Performance Evaluation System. Performance evaluation systems simplify the review process by providing structure for the reviewer and ensuring clear communication to the person being evaluated. The structure includes how often and when evaluations will be done. Determining the evaluation criteria for each position is the second step. Use as many objective, measureable criteria as possible. When giving the evaluation, include positive feedback, give specific examples in each area needing improvement, and set goals the employee must meet to improve.

Conclusion
As in all relationships, the employment relationship requires clear communication. All of the above fundamentals will go a long way towards helping your business establish clear communication and, in turn, make good business decisions. The result will be a smoother relationship and stronger business.