When businesses reach a point where they have 16 to 49 employees, certain compliance laws start to kick in. You need to prepare for additional laws and regulations as early as you can. Additionally, this is a good time to get your organizational culture, employee handbook, and HR policies ready for a larger workforce.
At some point, your company will be so large that the CEO can’t have daily conversations with each worker. Once you reach this size, you’ll need different ways to manage your culture, ensure legal compliance, and drive employee engagement. By setting HR priorities now, you can prepare your company for having a larger workforce in the future.
How To Develop HR Priorities as Your Small Business Grows
If you have between 16 and 49 employees, right now is a good time to prepare for additional compliance rules. Many federal regulations and state laws start when you hit 50 workers. However, a number of HR compliance regulations start when a workplace reaches 15 to 20 employees. To prepare for this change, you should plan in advance for new laws and formalize your culture now.
Formalize Your Culture
During this stage, spend some time formalizing your company’s culture. If you are uncertain about which parts of your culture you want to focus on, give your workers an employee engagement survey. Then, use these results to build your company’s vision, policies, and overall atmosphere.
Formalizing your company’s culture can happen through many different methods. To begin this process, try working through the following steps.
- Decide on your organization’s core values. These values form the center of your culture and who you want to be as a business.
- Determine how you will communicate those values. For example, you will want to include these values in your onboarding materials and employee handbook. You should also have other methods for ongoing communication about your culture. For example, you may want to use a newsletter, a bulletin board, or company-wide meetings.
- Figure out the best methods for recognizing employees who exemplify your organization’s values. This could be bonuses, employee-of-the-month awards, or simple thank yous.
- Always hire workers who match your values. Hone your hiring process so that you’re seeking out the right applicants.
- Be prepared to let workers go if they don’t match your organizational culture. Whenever possible, you can mentor and coach workers who need extra guidance.
Right now, you should focus on formalizing your informal pre-employment and post-employment practices so that they are as consistent as possible. Additionally, this is a good time to formalize informal activities, like happy hours and company lunches.
Navigate New Laws and Rules
Once you hit 16 employees, it’s time to start planning for future laws and regulations. While many laws don’t kick in until you reach 50 employees, there are some compliance requirements you’ll have to meet before this point. For instance, the Americans with Disabilities Act (ADA) must be followed by any company that has at least 15 workers.
Build Consistent HR Policies
Even when you do everything possible to be compliant, you may still be the subject of a lawsuit, audit, or investigation at some point. The best way to protect your business is by being consistent and fair. This means that all employees should be given similar access to mentors and training options. When you interview new applicants, they should all be asked the same questions.
Prepare Succession Plans
Eventually, your employees will move on to another organization or retire. By anticipating turnover, you can make sure that losing a single employee doesn’t devastate your company. Prepare a succession plan and create training materials so that new hires can quickly get up to speed on their duties.
As a part of your succession plan, identify your critical employees. Then, identify workers who may be able to take on their roles if the critical employee leaves. Over time, you’ll gradually want to transfer knowledge so that the prospective replacement is prepared for a new role.
Ensure Systematic Performance Management
When you only had a dozen employees, the CEO could sit down for a chat with each worker and provide immediate feedback about how they are doing. Now that you are growing, you need to be more systematic about your performance management. For example, you may want to create annual performance reviews, weekly check-ins, and performance rubrics for each position.
Once you have figured out how you want to manage an employee’s performance, you should communicate your expectations. Otherwise, workers won’t know what requirements they’re supposed to achieve. Additionally, you should update each job posting and job description so that they line up with the position’s performance rubric.
Review EEOC Guidelines
For small businesses at this stage of growth, complying with guidelines from the U.S. Equal Employment Opportunity Commission (EEOC) can be challenging. In 2023, the EEOC received 81,055 charges of discrimination. You don’t want to be a part of this statistic. Even if your workplace is completely innocent, you’ll still have to spend time and money defending your case.
When you have a close-knit company culture and no formal policies, it’s easy for EEOC problems to develop. As you grow, you need to standardize your policies and review EEOC guidelines so that you don’t inadvertently fall afoul of anti-discrimination laws.
Consider a Human Resource Information System (HRIS)
An HRIS is people management software that can help you with HR tasks, like data tracking and data entry. Basically, it can handle your performance management, HR, payroll, and accounting tasks. Besides being more efficient, adopting an HRIS helps improve your scalability for the future.
Additionally, an HRIS ensures your company is compliant with HR laws and regulations. Once you have an HRIS in place, you can take a step back and see how your broader organizational structure shapes up. Then, you can use this information to make changes and reduce inefficiencies. Over time, an HRIS can help you boost retention rates and employee engagement.
Follow HR Laws
As your business grows, more HR laws will start to apply to it. The following are just some of the major regulations your HR department will need to follow.
Age Discrimination in Employment Act (ADEA)
When you have 20 or more employees, you have to start following the ADEA. This law prohibits age-related discrimination for people who are age 40 or older.
Americans with Disabilities Act (ADA)
Likewise, the ADA kicks in when you have at least 15 employees. This law prohibits discrimination against qualified applicants and employees who have disabilities. For instance, it prohibits discrimination in hiring, firing, recruitment, compensation, leave, and training.
Consolidated Omnibus Budget Reconciliation Act (COBRA)
Created in 1985, COBRA applies when you have 20 workers or more. It governs how workers and their dependents are given access to insurance after they leave their position of employment.
Genetic Information Nondiscrimination Act (GINA)
GINA applies to workplaces that have 15 or more employees. It prohibits discrimination based on genetic information.
Pregnancy Discrimination Act (PDA)
The EEOC enforces three different laws that protect workers from pregnancy-related discrimination. This law goes into effect once you have at least 15 workers.
Title VII of the Civil Rights Act
Title VII prohibits employment discrimination based on race, religion, national origin, color, or sex. This law applies to any business that has 15 or more employees.
It’s important to keep in mind that many states have specific laws about paid leave, harassment training, and other HR topics. For instance, Washington state allows virtually every employee to access paid leave. To avoid legal issues, you need to familiarize yourself with the laws in your specific state.
Prepare Your Business for the Next Stage of Growth
While taking the next step in your company’s growth is exciting, it is also fraught with challenges and pitfalls. By planning ahead and setting the right priorities, you can prepare your company for success.
If you’re interested in learning more about setting HR priorities and other best practices, we can help. Reach out to Asure’s small business HR and payroll experts today to learn more.