A Small Business Guide to Establishing Human Resource Procedures

May 22nd, 2020

By Allison MacKenzie

A human resource (“HR”) department can be vital to a growing company. An HR department is responsible for many functions within an organization. These functions can include managing the employee life cycle (recruiting, hiring, development, retention, separation), administering compensation and benefits, creating policies and training programs, and ensuring compliance with federal and state laws. Whether a business does or does not have an HR department, it is of vital importance that each business implement HR policies and procedures for employees in order to comply with local, state, and federal law.  The attorneys at Allison MacKenzie have compiled a general overview of areas an employer should consider when establishing these policies and procedures.

Staffing Profiles

A staffing profile or employee profile outlines the expectations, necessary skills, and key competencies for any given role within an organization.  Creating a profile for each role within your company and the person who currently fills it will assist with keeping track of roles, designated tasks, obligations, strengths, areas of improvement, etc. A company can choose to include as much or as little information as it deems necessary.  A company can refer to this information in order to make a number of decisions including promotions, designations of tasks, and discipline.

Staffing Plan

A staffing plan can help a growing company determine the workforce and budgetary requirements for its current and future business objectives. If applicable, consulting with various department heads or teams to develop a staffing plan can help inform both short- and long-term staffing needs. Having a current and accurate staffing plan allows a company to review what its departments’ projected staffing needs will be at any given time. It is therefore imperative for a company to develop a staffing plan to determine where its current and upcoming hiring needs might be so that it can plan and budget accordingly.

Salary and Benefits

A salary structure document allows a company to manage its salary expenditure. It can also help in the retention of its current employees, as well as make recruiting, hiring and promoting efforts more focused and easier to execute. Having a salary structure document will enable a company to compare and contrast salaries with fair market value for similar positions, and it is also of the utmost importance that a company revise its salary structure once every six months to ensure that its business is staying competitive in the market. If your company offers other forms of compensation (such as health benefits, paid time off, stock options, profit sharing or a work-flex environment), these benefits should be separately documented and reviewed accordingly. If a company offers nontraditional benefits, such as the option to work from home, paid time off for volunteering, or a healthy living program that includes a gym membership, those benefits should be documented as well.

Employee Performance Evaluation

Evaluation of an employee’s performance is crucial., Employee Performance Evaluations allow a company to measure an employee’s work performance. Employee evaluation can also be used to gauge the amount of value added by an employee by looking at different factors including increased business revenue and overall employee return on investment (ROI). As mentioned above, job profiles can be used when evaluating employees to determine how each person measures up to their position expectations as outlined in the job profiles.  Evaluations may also assist in determining how job profiles might change. Employee evaluations are also a necessary way for an employer to ensure retention and address any staffing issues with the staff on an individual basis.


Part of an HR Department’s task is to handle the reporting of incidents in the workplace in a confidential manner.  It is important that a small business or company designate a certain person or group of people to which reports of sexual harassment, misconduct, workplace-related injuries, etc. are reported.   This is important that this person or people understand the nature and sensitivity of these reports.  It is also vital that there is a mechanism to move forward with reports of this nature.  If these reporting and investigative mechanisms are not in place, it may open an employer up for liability in the future.

When establishing an HR department, it’s important to adhere to local, state, and federal laws to ensure your business is in compliance. If you have any questions pertaining to establishing an HR department, please contact Allison MacKenzie at 775.687.0202.