The Essential HR Guide for Small Businesses and Startups: Best Practices, Tools, Examples, and Online Resources

By Marie Carasco and William Rothwell

Featuries tried-and-true, ready-to-use tools, examples, and resources, this guide teaches the nuts and bolts of HR for small businesses and startups and is the perfect desk reference for any organization who may not have the financial resources to invest in a fully-staffed HR department.Guides readers through the HR essentials, including developingpolicies and organizational best practices, managing and measuring performance, driving engagement and cultivating a culture, understanding legal obligations, assessing, risk, and guidance for developing leaders.

• Language: English
• Publisher: Independent Publishers Group
• Release date: Apr 20, 2020
• ISBN: 9781586445928

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Copyright © 2020 Carasco and Rothwell. All rights reserved.

This publication is designed to provide accurate and authoritative information regarding the subject matter covered. It is sold with the understanding that neither the publisher nor the author is engaged in rendering legal or other professional service. If legal advice or other expert assistance is required, the services of a competent, licensed professional should be sought. The federal and state laws discussed in this book are subject to frequent revision and interpretation by amendments or judicial revisions that may significantly affect employer or employee rights and obligations. Readers are encouraged to seek legal counsel regarding specific policies and practices in their organizations.

This book is published by the Society for Human Resource Management (SHRM). The interpretations, conclusions, and recommendations in this book are those of the author and do not necessarily represent those of the publisher.

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SHRM, the Society for Human Resource Management, creates better workplaces where employers and employees thrive together. As the voice of all things work, workers and the workplace, SHRM is the foremost expert, convener and thought leader on issues impacting today’s evolving workplaces. With 300,000+ HR and business executive members in 165 countries, SHRM impacts the lives of more than 115 million workers and families globally. Learn more at SHRM.org and on Twitter @SHRM.

Library of Congress Cataloging-in-Publication Data

Names: Carasco, Marie, author. | Rothwell, William J., 1951- author.

Title: The essential HR guide for small businesses and startups : best practices, tools, examples, and online resources / Marie Carasco, William J. Rothwell.

Description: Alexandria : Society for Human Resource Management, 2020. | Includes bibliographical references and index.

Identifiers: LCCN 2019053057 | ISBN 9781586445898 (paperback)

Subjects: LCSH: Small business--Management. | New business enterprises--Management. | Personnel management.

Classification: LCC HD62.7 .C3547 2020 | DDC 658.3--dc23

Printed in the United States of America

PB Printing 10 9 8 7 6 5 4 3 2 1

61.19305

Marie Carasco dedicates this book to her family, mentors, and friends, both old and new. Especially those who’ve loved and valued her presence.

William J. Rothwell dedicates this book to his wife, Marcelina V. Rothwell. She is the wind beneath his wings.

Brief Contents

List of Figures, Tables, and Exhibits

Foreword

Preface

Acknowledgments

About the Authors

Introduction

About the Advisory Board Members

PART I

HR FUNDAMENTALS FOR STARTUP AND EARLY STAGE BUSINESSES

Chapter 1

Talent

Chapter 2

Compensation

Chapter 3

The Soft Side

PART II

LEGAL AND WORKFORCE PLANNING FOR GROWTH STAGE BUSINESSES

CHAPTER 4

Legal

CHAPTER 5

Planning for the Future (Assuming You Survive the Now)

Appendix

Definitions

Contents

List of Figures, Tables, and Exhibits

Foreword

Preface

Acknowledgments

About the Authors

Introduction

About the Advisory Board Members

PART I

HR FUNDAMENTALS FOR STARTUP AND EARLY STAGE BUSINESSES

Chapter 1

Talent

Quick-Start Guide to Finding, Attracting, and Training Talent

Chapter One in a Nutshell

It Starts When You Start: Building a Company Culture Business Case and Lessons Learned

Interviewing for Perspective

Lessons Learned

Finding the Best People

Create a Job Description

Network Like the Boss You Are

Use Startup-Specific Platforms

AngelList

Upwork

StartupHire

VentureLoop

F6S

Some International Resources

Hire a Recruiter or Staffing Firm

Determining Your First Hire

The Art of Interviewing

Picking the Best Person for The Job

Before You Make an Offer

Making the Offer

The Value and Cultivation of Culture

Orienting New Hires to Your Company

Resources, Templates, and Tools for Managing Talent

Recruiting and Talent Acquisition

Job Offers

Interview Questions

Hiring the Right Employee

Onboarding

Additional Tools

References

Endnotes

Chapter 2

Compensation

Quick-Start Guide to Compensation, Benefits, and Culture

Chapter Two in a Nutshell

Equity vs. Bonuses for Retention: Benefits Business Case and Lessons Learned

The Results and the Impact

Lessons Learned

Deciding What to Pay

Nuts and Bolts in a Startup or Early Stage Business Compensation Philosophy

Step One: Align with Culture

Step Two: Connect to Business Strategy

Building a Comp Structure from Scratch

Reality Checks

Give ‘em What They Want and What the Law Requires

Don’t Ignore Your Competition or Trends in the Sector

Cautiously Consider Equity

Equity Legal Thresholds

Benchmark Salary and Equity Data

Pay Equity—Or Rather, Equality

Resources, Templates, and Tools for Compensation and Benefits

Compensation and Employee Benefits

Sample Policies

Additional Tools

References

Endnotes

Chapter 3

The Soft Side

Quick-Start Guide to the Soft Side

Chapter Three in a Nutshell

Promotions Can Be Problematic: Performance Management Business Case and Lessons Learned

Firing Failure

Lessons Learned

Evaluating Staff Performance and Impact

Making Performance Management Work

Choosing What to Review

Building and Sustaining Employee Engagement

Getting Employees to Stay

Improving Retention

Discipline and Documentation

Moving to Termination

Resources, Templates, and Tools for Managing the Soft Side

Performance Management Systems

Employee Engagement Programs

Disciplinary Policies, Procedures and Programs

Termination Procedures

References

Endnotes

PART II

LEGAL AND WORKFORCE PLANNING FOR GROWTH STAGE BUSINESSES

CHAPTER 4

Legal

Quick-Start Guide to Legal

Chapter Four in a Nutshell

What You Don’t Know Will Hurt You: Union Interactions Business Case and Lessons Learned

Organizing Activities Sometimes Comes from a New Hire

The Tables Turn

Things Got Contentious

Lessons Learned

Part One: Legal Heavy Hitters and Fundamentals in U.S. Employment Law

Family and Medical Leave Act (FMLA)

Fair Labor Standards Act (FLSA)

Exempt

Nonexempt

Salaried

Hourly

Workplace Accommodations and Americans with Disabilities Act (ADA)

Getting Through the Process

Step 1: Evaluate the Need for an Accommodation

Step 2: Understand Legal Rights and Responsibilities

Step 3: Conduct an Interactive Dialog on Reasonable Accommodation

Step 4: Decide Whether Accommodations Are Reasonable

Step 5: Consider Requiring a Health Examination

Step 6: Select an Accommodation

Step 7: Monitor and Document the Process

Understanding At-Will Employment

Resources, Templates, and Tools for Legal, Part One

FMLA

FLSA

ADA

At-Will Employment

Part Two: Risk Management, Regulations, and Labor Relations

Risk Assessment and Backup Planning

Make Sure to Give a NDA

Avoid Having a Single Point of Failure

Workers’ Compensation

Labor Management, Relations, and Unions

Resources, Templates, and Tools for Legal, Part Two

Labor Relations

Harassment

Workers’ Compensation

Unions

Additional Tools

References

Endnotes

CHAPTER 5

Planning for the Future (Assuming You Survive the Now)

Quick-Start Guide to Planning for the Future

Chapter Five in a Nutshell

Planning For Growth: Strategic Workforce Planning Business Case and Lessons Learned

Lessons Learned

Planning for Staff Development and Progression

Using Competencies to Plan for Staff Development

Defining Competencies

Identifying Competencies

Identifying Top Talent for Leadership

Identifying Key People

More on Identifying Key People

Why Is It Important to Identify Key People and/or Key Positions?

Understanding Your Labor Supply and Demand

Conducting Effective, Strategic Workforce Planning

Leveraging Data Analytics for Successful Implementation

Developing an Inclusive Workplace

Defining the Inclusive Workplace

How an Inclusive Workplace Relates to Strategic Workforce Planning

Establishing an Inclusive Workplace

Resources, Templates, and Tools for Workforce Planning

Succession Planning

Workforce Planning

Diversity and Inclusion

Additional Tools

References

Endnotes

Appendix

Hiring Checklist

Job Offer Checklist

Conditional Job Offer

Unconditional Job Offer

Temporary Job Offer

Telephone Pre-Interview Screening Form

Employment Reference Request Form (Phone)

Employment Reference Request Form (Mail)

Total Compensation Statement

Merit Increase Policy and Procedure

Performance and Salary Review Policy

Performance Review Meeting Checklist

Completed Performance Appraisal Form

Performance Appraisal Form

Performance Appraisal Form (including supervisory skills)

Progressive Discipline Policy

Performance Improvement Plan (PIP) #1

Performance Improvement Plan (PIP) #2

Separation of Employment Policy(Voluntary and Involuntary [Including Employee Death] Terminations)

FMLA Checklist for Individual Leave Request

FMLA Employee Request Form

FMLA Affidavit of Family Relationship

FMLA: Employer Response

FLSA Exemption Questionnaire

ADA Reasonable Accommodation Checklist

Request for Reasonable Accommodation Form

Communication to Employee in Response to Request for Accommodation

Retaliation Prevention Questionnaire

Investigation Summary Report

Workers’ Compensation Physician Designation

Union-Free Policy Statement

Succession Planning Policy

Employee Career Development Plan (Succession Planning)

Workforce Planning: Position Justification Form (Budgetary)

Definitions

List of Figures, Tables, and Exhibits

FIGURES

Figure 1.1.Business Needs Decision Tree

Figure 1.2.Key Elements of a Startup or Early Stage Business Strategic Workforce Plan

Figure 2.1.Benefits Levels Based on Funding

Figure 2.2.Six Basic Benefits Required by U.S. Law

Figure 4.1.Summary of the Types of Entities Required to Comply with the FLSA

Figure 4.2.ADA Definitions of a Disability

Figure 4.3.Summary of Worker’s Compensation Purchasing Options

TABLES

Table I.1.Content by Company Size

Table 1.1.Basic Job Description Checklist

Table 1.2.Basic Script to Network for Talent

Table 1.3.First Hire Evaluation Sheet

Table 1.4.Basic Business Legal Requirements Before Extending an Offer

Table 1.5.Verbal Offer Script

Table 1.6.Steps to Create a Healthy Culture

Table 2.1.Point Method Example

Table 2.2.Proposed Ranges Examples

Table 2.3.U.S. Laws on Pay Discrimination

Table 2.4.Basic Compensation Philosophy Statement Checklist

Table 4.1.Summary of the Five Titles in the ADA

Table 4.2.At-Will Employment Exceptions

Table 4.3.Company Considerations During Union Activities

Table 4.4.The FMLA Employee Eligibility Checklist

Table 4.5.FMLA-Covered Circumstances and Leave Time

EXHIBITS

Exhibit 4.1.FMLA Compliance Checklist

Exhibit 4.2.FLSA Compliance Checklist

Exhibit 4.3.Staffing Risk Management Planning Checklist

Exhibit 4.4.Workers’ Compensation Risk Management Checklist

Exhibit 5.1.Key Person Profile

Exhibit 5.2.Key Position Profile

Exhibit 5.3.Strategic Workforce Planning Worksheet

Foreword

The reality for several entrepreneurs when they set out to start their business is they may not have the network, financial resources, and/or some of the professional skills necessary to launch, operate, and/or grow the business. They start their companies with a dream and a passion for what they believe is a good idea, service, or product. They learn how to manage and operate their business by way of trial by fire. That process may lead to costly mistakes. The hope is that at some point during their journey, someone or something has the answers to help. The Essential HR Guide for Small Businesses and Startups is the ideal book for startups and small businesses who have identified the importance of people to their company.

One of the keys to success in any organization, whether it be a startup, an existing small business, or a growth phased business, is having good people at every level. As a member of the advisory committee involved in shaping the content of this book, this resource has become increasingly important because it provides essential guidance and solutions to the often-unanswered questions posed by business owners related to human resource management. For the past 20 years, my professional life has been immersed in the world of entrepreneurship, from educating, consulting, and working for small business owners, to launching companies of my own. Over the years, the topic of human resource management has been a Pandora’s box. Many new entrepreneurs and experienced business owners have not embraced or grasped the concepts in human resource management. For some, it’s compliance. For others, it’s the process of hiring people and managing payroll. However, these and other related human resource topics are areas of the business where an entrepreneur, small business owner, or manager will not find the answers they need from an Internet search.

First, talent or human capital is interwoven throughout the entire organization, and without understanding the big picture, any single approach can send ripple effects through the company. Second, no two companies are exactly the same, and the dynamics of acquiring, training, developing, retaining, and managing people are skills that not only need to be obtained and developed, but also tailored. Before an entrepreneur can expect employees to share and connect to the vision and mission of their business, they will need to understand how to do so. The Essential HR Guide for Small Businesses and Startups will help lay a foundational understanding of how to attract, compensate, manage, and train your current and future talent, as well as how to align employees with the overall goals of your company using practical tools you can implement immediately.

The Essential HR Guide for Small Businesses and Startups should be read by anyone in a position to recruit, hire, manage, and/or promote talent in a startup, early stage, or small business. This includes founders, business owners, middle management, senior managers, HR officers, or those with HR responsibilities. This book is especially valuable to those with limited experience with HR, have few resources, and are seeking to build and grow their organization responsibly using proven methods, tactics, and tools to structure and manage human capital in their business.

Marie Carasco and William J. Rothwell are the ideal authors for this book because they not only have expertise in human resource management, strategic workforce planning, and managing change, but they also both own and operate small businesses. This book is written through the lens of an entrepreneur. It concisely and effectively considers and addresses the unique challenges faced by owners. The Essential HR Guide for Small Businesses and Startups captures the dynamics experienced by managers and HR personnel working for a small business owner, and outlines the key procedures and processes needed to operate and support a startup, early stage, or small business. It will become evident when reading this book that the content bridges the gap between human resource theory and application. The reader doesn’t need a formal business background, education, or training to leverage the tools and resources provided. After completing this book, the reader will be knowledgeable and empowered to develop, implement, and manage all things human resource related in a startup, early stage, or small business.

My hope is The Essential HR Guide for Small Businesses and Startups will become the go-to tool that every entrepreneur utilizes when starting or growing their business. The answers to questions like How do I pay someone when I don’t have any money?, When should I hire someone full time?, and How do I build culture? will be found with additional resources in The Essential HR Guide for Small Businesses and Startups.

—Rod Dauphin, MBA

Education Services Director

Goldman Sachs 10,000 Small Businesses Initiative

LaGuardia Community College

Preface

Natalie Robehmed outlined key aspects of startups in her 2013 Forbes article entitled What Is A Startup? Startups are companies that generate less than $20 million, have fewer than 80 employees, have been in business for less than 10 years, and the founders of the company remain in control. A business is no longer considered a startup when these factors increase, the company has more than one office, the business becomes profitable, the company is sold or acquired by a larger company, the organization has over five people on the board, or the founders have sold personal shares.

Our interest is to highlight and help strategically address the unique people-related challenges faced by startups and small businesses. To do so, this book is