Welcome to the Introduction to Human Resources Training for Entrepreneurs
Courtesy of: The SBA Learning Center presents: Introduction to Human Resources.
Human resource management plays a critical role for small businesses, so as a small business owner, it is important that you understand the main human resource management issues.
Business owners will perform the needed human resources functions in the first stages of organizational development, or outsource them. As the organization grows, if hiring human resources professionals becomes cost-effective, business owners should hire qualified professionals with human resources skills that meet their business requirements.
This course is designed to provide an overview of Human resource management for entrepreneurs. It describes the important principles and processes used in human resource management.
In lesson one, we define human resources and describe basic human resources concepts, such as the importance of human resources, human resources activities, and the human resources officer.
Next, in lesson two, we explain the basics for recruitment and selection, including effective hiring processes, conducting a job analysis, and hiring personnel.
In lesson three, we provide an overview of training and development processes.
For lesson four, we explain employment laws and regulations and best practices for creating a safe workplace.
Finally, in lesson five, we describe the termination and separation processes, including policies and procedures, firing legally, and exit interviews.
You can quickly navigate to any of these lessons by selecting the dropdown menu. Select the lesson title to jump to the desired lesson.
Select Next to go over the course objectives.
This course has four main objectives. Upon completion of this course, you should be able to
- Describe basic human resources concepts,
- Identify important human resources principles for a small business,
- Explain the key processes in human resource management, and
- Identify the various laws associated with human resources. Select Next to begin Lesson One, Introduction to Human Resources.
Lesson 1: Introduction to Human Resources
What do we mean by human resource management? Why is it important for small business owners to understand? This lesson introduces you to basic human resources concepts and discusses the importance of human resource management for your business.
This lesson will:
- Define human resources,
- Explain the importance of human resource management, and
- Identify human resource management activities. Select Next to begin lesson one.
What is Human Resources?
How do we define human resources?
Human resources, or HR, is a term that is used in business to refer to the people who work for a company or organization. It also is used to refer to the department of a company that is responsible for managing those resources, such as hiring and training new employees and overseeing the benefits and compensation packages provided to all of the company’s employees. This term was coined in the United States during the 1960s, when labor relations became a greater concern for U.S. businesses, and has since spread around the world.
Human Resource Management
Human resource management is all about people. It also includes doing whatever is reasonably possible to find that delicate balance between what best serves the basic needs of employees and what best serves the market-driven needs of the company within the regulatory compliance issues provided by the States and Government.
Why is it Important?
Why is human resource management important for small businesses?
As described earlier, employees are a critical component for any business. Therefore, successfully managing the human resources aspect of your business is critical, even for very small businesses. Through successful human resource management, employee performance, commitment, and loyalty to the job can be enhanced. Every company, regardless of size, location, or purpose, must deal with human resources issues in a way that’s best suited to its needs and situation.
The objective of human resource management is to serve as a consultant for the rest of the company. By creating a positive attitude among employees, reducing spending, and making maximum use of resources, human resource management helps the company achieve its
objectives and mission. The importance for following human resource management practices includes:
- Proper human resource management policies and practices enable employees to grow in knowledge and experience and thus help the company expand and continue to meet the changing needs of customers.
- Effective human resource management practices teach individuals about teamwork. It focuses on the team and company goals, and contributes to serving the customer with excellence.
- Human resource management practices should ensure that employees are trained and ready to meet the job requirements.
- When proper recruitment and selection practices are followed, the company is able to select the right people for the right job. This reduces employee turnover due to job satisfaction.
- Human resource management practices help the organization maintain cordial relationships with unions. Union members learn to respect that the company is also interested in the workers well-being and assists with workers not going on strike.
Human Resources Activities
Human resource management deals with a variety of activities for small businesses. This page describes activities that apply to human resource management.
- Human resources planning is a process where the company identifies vacant jobs, whether the company has excess or shortage of staff, and how to deal with this excess or shortage.
- During the job analysis, human resource management does an analyzes vacant jobs, prepares a job description, and publishes job advertisements.
- Recruitment and selection deals with strategies, tactics, and processes for obtaining, recruiting, hiring, and retaining employees needed to support business objectives.
- New employee orientation training is conducted for new employees to inform them about the company’s background, mission, objectives and policies.
- Performance evaluations are conducted either monthly, quarterly, or annually. Future promotions, incentives, increments in salary are decided using the performance evaluation as a tool.
- Employees need to understand the value of their total compensation package.
- Government-mandated laws and regulations touch almost every aspect of the human resources function. Regulations must be followed for the employees’ and company’s welfare, health, and safety. This includes the company’s efforts to prevent and/or mitigate loss, risk to or from personnel, threats to its physical assets, damage to its technology and intellectual property, and risk arising from elements surrounding the environment.
- Labor relations deal with the formal labor-management relations elements, including protected activities, unfair practices, union organizing, and recognition and representation elections, as well as collective bargaining and contract administration.
Human Resources Officer
Who ensures that the human resource management activities are being implemented for your business? Human resources officers are responsible for overseeing human resource management activities.
Human resources officers perform the following duties:
- They are directly responsible for the overall administration, coordination, and evaluation of the human resources function
- They provide support in the various human resources functions, which include recruitment, staffing, training and development, performance monitoring, compensation, compliance and employee counseling
- They work directly with managers to assist them carrying out their responsibilities on personnel matters
- They provide advice and assistance to employees, which may include information on training
needs and opportunities, job descriptions, performance reviews, and personnel policies
- They provide recommendations to executive management for improvement of the company’s policies, procedures, and practices
- They maintain knowledge of industry trends and employment legislation and ensure company compliance
- They provide advice and support to supervisors and staff selection committees and ensure that they have accurate and timely information in order to make effective decisions.
The human resources officer is critical to a company because failure to provide adequate advice or assistance may result in lost opportunities for staff development, poor staff morale, financial loss, and a loss of credibility.
Lesson 2: Recruitment and Selection
According to the SCORE website, 42 percent of small business owners report that hiring new employees is one of the biggest challenges for their company. This lesson describes the recruitment and selection process for human resource management.
This lesson will:
- Explain effective hiring processes
- Identify the recruitment and selection procedures Select Next to begin lesson two.
Effective Hiring Processes
As discussed earlier in this training, it is critical that the right employees are hired to ensure your small business is successful. An effective recruitment and selection process matches the right person with the right job skills and reduces employee turnover due to job satisfaction.
When going through the hiring process, it’s important that the applicant’s knowledge, skills, and abilities, or KSA’s, align with the job requirements and the company’s culture. It’s also important to hire for attitude. Companies need to find people who will come to work every day on time, smile, be flexible and optimistic, work hard, and care a lot. Decide on the qualities and attitudes you want in an employee remembering, unlike skills, these can’t be taught. If you need help assessing your needs, you can purchase software, services, and other resources online. Some organizations, like SBA District offices and resource partners offer free counseling, while trade groups and organizations may offer guidance as a member benefit.
Strategic Staffing Plan
A strategic staffing plan outlines your company’s staffing requirements and begins with an effort to reassess your department’s human resources needs in the context of your company’s business priorities. The idea is to begin thinking in terms of need rather than job, long term rather than short term, and big picture rather than immediate opening.
When drafting the strategic staffing plan, think about the tasks and responsibilities that are keyed to business goals and will enhance your company’s ability to compete. Determine which competencies and skills are necessary to produce outstanding performance, which combination of resources, internal and external, gets the most mileage out of the tasks, find people who are more than simply technically qualified but can carry forward your company’s mission and values, and use the selection interview as only one of many tools designed to make the best choice of hiring. You are not just filling jobs, but constantly seeking to bring the skills and attributes to your company that meet whatever challenges it may face. You must look beyond the purely functional requirements of the various positions and focus instead on what skills and attributes employees need to perform those functions exceptionally well.
Once you have a strategic staffing plan, the next steps are to perform a job analysis, compose the job description, and prepare the job advertisement. This screen describes each step. Select the numbers at the bottom of the player and then select the play button to listen to more information for each step.
When analyzing the job, review existing job descriptions, public source information, and job classification systems. The following areas should be included in a job analysis:
- Skills and knowledge required
- How the work is performed
- Typical work settings
- Behaviors required to fulfill the job properly
Conducting surveys and interviews to existing employees in the same job and supervisors over the job provides information on how to classify the job.
Listed here are helpful resources to use during the job analysis.
- The Occupational Information Network, or O NET, system is an occupational requirements and worker attributes database.
- The Occupational Outlook Handbook, or OOH, is a publication that can be found on the U.S. Department of Labor Bureau of Labor Statistics website, which can help you find job duties for hundreds of occupations.
The next step is to compose the job description. For this step, you should define the job title, department, who to report to, Fair Labor Standards Act, or FLSA, status, job summary, essential duties and responsibilities, competencies, supervisory responsibilities, qualifications, education and/or experience, certificates, licenses, clearances, physical demands, work environment, and the equal employment opportunity, or EEO, and affirmative action plan, or AAP, statement. With today’s workforce, it is important to describe the culture of the workplace in the job description and answer
“What’s in it for me?” to the candidate.
Once the job description is developed, it needs to be advertised. Companies use a variety of methods to advertise job openings, internally and externally. Internal examples include posting the job vacancy to the company website and asking for employee referrals. External examples include posting the job vacancy to online job sites and professional and social networks.
The next step in the recruitment and selection process is managing applications and resumes. This is called the screening process. The screening process provides a vital opportunity for you to focus on what candidates can offer your company. Using an application tracking system, or ATS, can help businesses manage applications and resumes for job vacancies.
Once applicants are selected using the screening process, next is the interview process. You want to ensure the interview elicits responses from applicants that can be measured against your expectations for the position. The interview process allows you to express your company’s objectives and mission to the applicants.
An effective way to obtain the applicant’s work background and experience and determine if they have the necessary skills and qualifications for the job is to begin with a phone interview. This helps narrow the pool of applicants. After the phone interview, the selected applicants should come in for an in-person interview. This is typically a one-on-one interview between the applicant and the hiring manager.
Several assessment tools are available that can assist with aligning the right behaviors with job
expectations and needs. If your business requires specific skills or abilities, you can ask applicants to answer questions, problems, and/or scenarios that will help you determine whether they have appropriate skills. If you have unique hiring needs, you can write your own questions, problems, and/or scenarios.
This helps eliminate the gut feeling hiring techniques.
Background and Reference Checks
Once you have selected a few applicants, you will want to run background and reference checks. This should be done prior to making an offer. Background checks can be used to check credit and criminal history. However, you will need to obtain the candidate’s concurrence prior to running background checks to ensure there are no privacy issues. For example, under the Fair Credit Reporting Act, or FCRA, you must obtain written consent from the candidate before seeking their credit report. Also, state laws vary on obtaining a candidate’s criminal history. You should research your state laws regarding this topic prior to running a criminal history check on the candidate.
Reference checks can be done via phone or using an online applicant reference checking tool to obtain information about the applicant’s behavior and work performance from prior employers.
Base your decisions about a specific applicant upon specific evidence rather than any gut instincts. If you hire people who can do the job and who possess the behaviors needed instead of people you merely like, you will have higher productivity and quality in your products or services.
Once you have selected the right candidate, it is time to make him or her an offer. It is important that you are aware of the industry-standard salary range for the position and are prepared to make an offer in that range. Please note that you may have to do some negotiating, and be prepared to walk away if the candidate is too demanding.
Lesson 3: Training and Development
You have hired the perfect employee for your business. Now what? How do you ensure that your new employee possesses the necessary skills to meet your business objectives? As a small business owner, it’s important to ensure your employees are able to perform the tasks necessary to implement your company’s objectives. Training new employees is an essential human resources function that serves as investment in the business. This lesson provides information on training and development and effective employee relations for your business.
This lesson will:
- Identify important training and development concepts
- Explain benefits of employee recognition Select Next to begin lesson three.
Orientation training, sometimes called New Employee Orientation, is a good first step to provide employees with the tools necessary for theirs and the company’s success. This training should help them transition easily into a new company culture. Orientation training topics should include how to perform the job safely and efficiently, and should also include an overview of the company’s mission, objectives, and policies. Orientation training may also provide practical guidance and information about administrative topics such as submitting timesheets, leave slips, using vacation, sick leave, federal laws and posting regulations, and other important processes.
Employee training shouldn’t stop with your new hire orientation procedures. Organizational training needs are ongoing, particularly in today’s economy. Offering professional development opportunities for employees is a good way to ensure your employees are current with technology, environmental, and other changes that may impact your business. You can also offer tuition assistance and tuition reimbursement programs to assist your employees. There are many no-cost or low-cost training options available.
Listed here are some ideas for offering training to employees without breaking your budget.
- In-house training occurs onsite and can be facilitated by trainers within your organization.
- Brown-bag lunches allow employees to help educate the team on certain topics.
- Trade associations offer training programs for members.
- eLearning is a great way for employees to learn new topics and at their own pace. There is a large variety of courses available that are either free or low-cost.
- Mentoring programs allow new or less experienced employees to learn from experienced employees.
Small businesses that don’t have large budgets can benefit from human resource management in terms of employee recognition programs and activities that provide value and keep employees engaged and committed to the job. Even simple things like a thank you program can generate results. Taking the time to ask employees what’s important to them and developing programs and activities to meet those needs can help minimize turnover and absence, both of which contribute to higher staffing costs.
Lesson 4: Employment Law and Creating a Safe Workplace
This lesson provides information about employment laws and how to create a safe workplace. This lesson will:
- Identify important employment laws
- Describe how to create a safe workplace Select Next to begin lesson four.
Employment Laws and Regulation
The legal aspects for human resource management are complicated and can be a bit daunting. Laws affect virtually everything in the field of human resources and it’s important to ensure the company is compliant with Federal and State laws and regulations that impact all aspects of the employee relationships, from hiring to termination.
Listed here are a few important laws to abide by when hiring.
- The Equal Employment Opportunity Commission, or EEOC, is the federal agency responsible for enforcing federal antidiscrimination laws in employment. You must post State and Federal EEOC notices in the workplace.
- Title VII of the Civil Rights Act of 1964 makes it an unlawful employment practice for any employer to discriminate or deprive any individual of employment opportunities because of the applicant’s race, color, religion, sex, national origin, physical disability, or other characteristic protected by law. It also provides guidelines on sexual harassment. Remember to keep job
postings free from possible discrimination.
· You can use professionally-developed ability tests to ensure applicants possess relevant skills, as long as they are not designed or administered in a discriminatory manner. EEOC Uniform Guidelines provide three test validations. First, content-validation tests must correspond to job tasks. Second, construct validation shows the test measures specific personal characteristics that are shown to be necessary for performance of the job. Third, criterion validation shows statistical correlation between performance on the test and actual job performance.
- When hiring veterans, businesses need to understand all of the information regarding the process, as well as the applicable laws and regulations, such as the Veterans’ Employment and Training Service, or VETS. VETS protects service members’ reemployment rights when they are returning from a period of service through its administration of the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA).
- When a business hires new employees, it must obtain information needed for records and complete required forms. Visit the Hiring Employees page on IRS.gov for more information.
Other laws to abide by include Americans with Disabilities Act, or ADA, Immigration Control and Reform Act, or IRCA, and Office of Federal Contract Compliance Programs, or OFCCP, for government contractors. As a small business owner, you need a firm understanding of the laws, forms required, and recordkeeping requirements. Refer to the U.S. EEOC website for more information on the laws and regulations enforced by EEOC.
When you hire someone to perform work for you, be sure that your practices align with all laws pertaining to your industry. Listed here are some important practices that pertain to all businesses.
As an employer, federal and state laws require you to clearly display official labor and employment posters detailing federal and applicable state labor laws. Both federal and state agencies provide posters at no cost to employers.
- The Equal Pay Act of 1963, or EPA, ensure that men and women who perform the same job at the same levels of skill, experience, and responsibility must be paid the same.
- The Fair Labor Standards Act of 1938 details the child labor provisions that are required by law.
- The National Labor Relations Act, or NLRA, defines the rights of employees to organize and bargain collectively with their employers through representatives of their own choosing. The basic guide to the NLRA provides general principles of NLRA-enforcement procedures.
- The Immigration and Nationality Act, or INA, allows U.S. organizations to employ foreign workers to fulfill certain types of job requirements. INA is especially important to small business owners because it addresses employment eligibility, employment verification, and non- discrimination.
The Guide to Disability Rights Laws provides an overview of Federal civil rights laws that ensure equal opportunity for people with disabilities. This guide summarizes the major disability laws affecting employers, governments, schools, and other organizations.
Another important human resources function is to provide a safe workplace. This can be directly derived from Section 5 of the Occupational Safety and Health Act of 1970, or OSHA, commonly known as General Duty Clause. OSHA requires places of employment to be free from recognized hazards that are causing or likely to cause death or serious physical harm and to follow all safety and health standards in the act. The workplace should also be free of workplace violence, which includes but not limited to intimidation, threats, physical attack, domestic violence, or property damage in the workplace. Training employees is a good way to minimize risks in the workplace.
Discrimination and Harassment
Discrimination and harassment in the workplace is a serious subject and must be handled carefully. As an employer, it’s important to understand discrimination laws and to teach your employees on their rights and responsibilities. Being proactive about these policies is an employer’s best tool in creating an appropriate and comfortable workplace.
Title VII of the Civil Rights Act provides guidelines for many areas including sexual harassment. Sexual harassment is more than harassment that has sexual overtones. It is also based on the intent behind the behavior and the connection between the behavior and the working circumstances and conditions of the person being harassed. It also includes abuse of power in the workplace. Review EEOC guidelines to understand how behaviors are labeled. These guidelines are loaded with terms that are highly dependent upon perceptions and interpretations. No company can afford to ignore this issue, and no human resources officer can afford to forget what one person sees as harmless another may not. Companies have to provide a written policy, train everyone, provide the consequences for violating the policy innocently or otherwise, create a compliant reporting process within the company, investigate all claims, take decisive action, and document every complaint from beginning to end.
Lesson 5: Termination and Separation
How an employer handles firing or laying off an employee can make a difference on how the separation of employment actually takes place. This lesson provides information on policies and the termination and separation process.
This lesson will:
- Describe important termination and separation concepts
- Identify the termination and separation process Select Next to begin lesson five.
At-will employment is the fundamental law in all states, except Montana. It allows an employer to discharge an employee for any reason or no reason at all, with or without notice. It also allows the employee to terminate his or her employment at any time and for any reason. You want to ensure the termination does not have any implications of possible violations of any State or Federal guidelines; otherwise, you may have risk for a lawsuit, even with the at-will doctrine. Exceptions to the at-will doctrine include firing someone for a discriminatory reason, or out of retaliation for performing a legally protected action.
Note that almost every collective bargaining agreement has provisions that prevent firing a union member except for cause. Also, probationary periods may modify or destroy the at-will nature of employment.
When it comes time to fire an employee, remember that even though the employee may be employed through the at-will employment you should still keep your risk to the company at a minimum. The first step is to make sure that you have the paperwork in order. Look at performance evaluations, disciplinary action forms, and attendance sheets that support a proper reason for firing the employee that would not be viewed as discriminatory.
By law, employers must inform the employee of his or her rights under the Consolidated Omnibus Budget Reconciliation Act, or COBRA, for continuing to stay on the company’s health insurance program for a limited period of time. COBRA rights generally applies to group health plans maintained by companies with at least 20 employees. There are similar plans for companies with less than 20 employees, sometimes called mini-COBRA. If this is the case for you, check your state insurance commissioner’s office to see if such coverage is available.
It is also important to understand the laws for final pay. Employers are not required by Federal law to give fired employees their final paycheck immediately. However, some states may require immediate payment. Make sure you know your state laws regarding final pay.
If your company has 100 or more employees, you must follow the Worker Adjustment and Retraining Notification, or WARN, Act. The WARN Act provides protection to workers, families, and communities, requiring to provide a 60-day notice of mass layoffs or plant closings. Employees entitled to advance notice under the WARN Act include managers, supervisors, hourly-wage, and salaried workers.
If you have fewer than 100 employees, you must still follow any State or Federal guidelines for layoffs. Your local State workforce commission is a good resource to assist with helping displaced employees and providing guidance on layoffs.
You should carefully prepare for the termination session. It is a good idea to use a checklist to cover all points. When possible, human resource management and the manager should meet with the employee. Terminations should be defined as voluntary or involuntary for proper handling of unemployment claims. Voluntary termination refers to when an employee provides a resignation. Involuntary termination includes firing or layoffs.
Termination meetings should be short and precise. Provide a simple statement for the reason to terminate. If you followed a progressive disciplinary procedure, simply indicate the steps taken and the employee’s failure to correct behavior or bring performance to standard. If your State requires final pay on termination day, provide this at the meeting. If the employee had benefits through the company, inform him or her when they will end and when their COBRA notice will be sent, if applicable. Explain your job reference policy. For example, you may only provide job title, dates of employment, and salary history to prospective employers. If the employee or prospective employers require more detail, it will require written consent from them. Collect all keys, credit cards, technology device, and property belonging to the company. Explain that human resources or designee will escort them to their desk to gather their items as a protection. Doing this provides a witness to observe what is taken. Advise other employees that the employee is no longer working at the company once he or she leaves. Do not get into details or say anything that would slander the employee. Remember to handle all terminations with dignity and respect.
Exit interviews can be a useful tool to gather metrics. Of course you have to decide if you want to gather information from voluntary and involuntary terminations or just voluntary. Decide what information you want to gather and compare. For example, you may want to track why they sought other employment for voluntary terms. Then track metrics to see if you have a compensation, benefits, or supervision issue. The exit interview or a termination checklist is a good document to have the employee sign with a disclaimer that states: “I have completed all requirements for separation of employment. Upon receipt of my final pay as stated above, I release all claims against the company and its officers, individually, and in official capacities.”
You’ve reached the end of the SBA’s Introduction to Human Resources training course.
You can now describe basic human resources concepts, identify important human resources principles for a small business, explain the processes in human resource management, and identify the various laws
associated with human resources.
Now that you have completed the course, take the next steps. Put what you have learned into action.
SBA has a broad network of skilled counselors and business development specialists. Below is a short description of our resource partners:
- Small Business Development Centers (SBDCs) are associated with institutions of higher education—universities, colleges, and community colleges. More than 900 SBDCs offer no-cost, extensive, one-on-one long-term professional business advising, low-cost training, and other specialized services, such as procurement, manufacturing, and technology assistance, which are critical to small business growth.
- SCORE offers free, confidential small business advice from successful entrepreneurs. SCORE is a nationwide program and boasts more than 12,000 volunteers to give you guidance to grow your business.
- Women’s Business Centers (WBCs) provide free management and technical assistance to help women and men start and grow small businesses. There are over 100 WBCs located throughout the U.S. and Puerto Rico.
- SBA’s 84 District and Branch offices connect entrepreneurs to resources, products, and services that can help them start, manage, and grow their business. These offices are located in all 50 states, Puerto Rico, the U.S. Virgin Islands, and Guam.
- The SBA Learning Center is an online portal that hosts a variety of self-paced online training courses to help small business owners explore and learn about the many aspects of business ownership. Content is filtered by topic, so no matter the stage of your business, or the kind of insight you need, you can quickly get answers.
Find your local resource using our handy zip-code tool: www.sba.gov/local-assistance
Have a Question?
This course has covered a great deal of material and there is much to learn and understand about human resource management. If you have questions about the human resource management aspects for running your business or another business issue, contact an SBA business development specialist or resource partner for assistance.
- SBA works with a number of local partners to counsel, mentor, and train small businesses. Find an SBA district office or other resources near you at: https://www.sba.gov/tools/local- assistance
- To provide feedback, comments, or suggestions for this or other SBA course content, please use the following email: email@example.com
- For general questions about SBA products and services, call SBA at 1-800 U ASK SBA (1-800 827-5722) or e-mail SBA at firstname.lastname@example.org
Congratulations on completing this course. We hope it was helpful and provided a good working knowledge of basic human resources concepts for small businesses. Select the certificate to receive a course completion confirmation from the U.S. Small Business Administration.
The Article, Course and the Tools below are related to the course you just completed. They are provided to help you take action on your path to entrepreneurial success. You can also get in-person assistance for all of your business needs through a local resource center. And if you liked the course, please help spread the word by sharing it with your friends!
Read an SBA Article.
This helpful article, A Small Business Owner’s Guide to the Hiring Process, provides helpful information and resources to make the employment process more manageable and effective for your small business.
Take Another Course.
The talent and expertise of your employees is one of your businesses’ greatest assets. The Small Business Employee Recruitment and Retention course reveals recruiting and retaining strategies to help you locate, recruit, and retain talented employees.
Try a Tool.
SBA’s partner, SCORE, has a list of human resources tools that may help you get started.
Find local assistance!
SBA has a broad network of skilled counselors and business development specialists that you can search using SBA’s zip code tool.