Whether you just started operations this year or have been slowly growing for several years, there are a few important things you should do to set your business up for long-term success. While HR and payroll practices might not play a major role today, they will eventually form the backbone of your operations. Right now is the best time to begin preparing your hiring and payroll practices for the future.
The Top HR Steps for Growing in the Early Stages of a Startup
In the early stages of a startup, it can feel like each day is spent putting out fires and responding to immediate worries. While it may feel like you don’t have the time to focus on HR, this is something you need to do. Taking a few important steps in the present can serve as a springboard for your future growth.
1. Focus on Hiring
The first 10 employees at your company are some of the most important hires you’ll ever make. These are your Swiss Army knife workers. They can handle any task, jump between multiple roles, and are happy to work overtime. Eventually, these early employees will set the tone for your company’s culture and every hire you make afterward, so choose them wisely.
2. Setting the Stage
The hiring decisions you make and the HR systems you develop today will prepare your company for its future growth. You need to think about how your current decisions about your mission, values, training tools, and HR practices will impact future employees. While your first dozen employees have to create their standard operating procedures from scratch, you will eventually need to codify these measures so that you can easily train new workers.
There are always growing pains as a company goes from being a startup to having 15+ workers. The steps you take right now will determine how easily you navigate your next stage of growth.
3. Use Job Boards and Formal Employee Referral Programs Wisely
Job postings and employee referral programs are important ways to reach out to prospective job applicants. Employee referral programs are popular because most employees refer friends and acquaintances who have similar skills and personalities. However, when creating this kind of program, it’s important to focus on quality over quantity. Set up guardrails, like only paying bonuses for employee referrals that remain at your company for at least 90 days.
This is also a good time to review your job postings. To attract employees who will match your culture, you should create job postings that reflect your organization and the employee’s day-to-day duties. These job postings and descriptions will be used to determine non-exempt statuses and other compliance requirements, so craft them carefully.
In our 2024 HR Benchmark Report, we found that 93% of fast-growth companies were confident about having compliant job postings. Only 80% of zero-growth businesses could say the same. If you want to take the next step in becoming a fast-growth company, you can start by creating compliant job postings.
4. Remember: HR Compliance Starts Early
Some HR laws, like the Affordable Care Act (ACA), kick in when you have 50 or more workers. However, there are a few laws that you still need to follow during the early stages of your company’s growth. For example, California requires all businesses that have at least five employees to carry out an hour of sexual harassment and abusive conduct prevention training for non-managers every two years. This requirement jumps to two hours every two years for supervisors.
Additionally, businesses of all sizes are required to generate important tax forms for their workers, such as 1099s and W-2s. If you don’t fulfill these compliance requirements, your organization will face stiff penalties.
5. Get Payroll Software for Better Business Management
Almost half of American workers will quit their jobs if they have two issues with receiving their paychecks. About two-thirds of workers live paycheck to paycheck, so they can’t afford to get paid late. Fortunately, payroll software can improve your company’s payroll practices.
The best payroll software integrates time-tracking features and time-off requests as well as payroll features. This means the software can instantly create paychecks based on each worker’s hours. Then, it can also deposit each paycheck into the account your workers have on file.
Payroll software isn’t just a convenient way to manage payroll. It can also save you money. By using payroll software, you can prevent falsified time sheets, extended breaks, padded labor hours, buddy punching, and other forms of payroll fraud. Buddy punching costs American employers an estimated $373 million a year, so it’s important to implement prevention measures early on in your company’s growth trajectory.
6. Start Building an Employee Handbook
Right now is a good time to start looking ahead toward your next stage of development. An employee handbook codifies your rules and procedures. It also contains important policy documents and training materials about compliance topics, such as anti-harassment training and Fair Labor Standards Act (FLSA) notice requirements.
Following the best HR practices is something fast-growth companies do. Among businesses with less than 25 workers, 80% of fast-growth businesses had employee handbooks. Only 50% of businesses that posted no growth for the previous year had employee handbooks.
7. Outsource Payroll and HR Services
One way you can prepare your organization for future growth is by outsourcing your payroll and HR services. In the short run, outsourcing allows you to get an HR and payroll team far more talented and extensive than your small business can afford. Over the long run, outsourced services give you better scalability. Instead of having to painstakingly build an entire payroll and HR apparatus over time, you can instantly grow your business whenever you need to.
More importantly, outsourced services ensure you are in compliance with important regulations and laws. Until your company can afford its own employment lawyer and dedicated HR staff, it’s a good idea to leave important compliance requirements to the experts.
Why You Need To Prepare for Your Future Growth Today
By preparing your business for future growth, you can ensure that your company is ready for the challenges it meets along the way. Your focus on the future also inspires your employees to think about long-term goals. Plus, your preparations today mean you won’t have to scramble to find a new payroll provider or outsourced HR team tomorrow.
Many startups require small business loans or other outside funding in their early stages. To get this funding, you will need to have a solid business plan that shows your company has growth potential.
Plus, the right programs and services can help you document your approach to payroll, tax compliance, and HR. If you ever need this documentation for a lawsuit or audit, you’ll be ready.
Get Started on the Next Stage in Your Startup’s Growth
Whether you want to access outside investment opportunities or ensure better legal compliance, there are many reasons to prepare for your company’s long-term growth. With the right measures, you can prevent potential lawsuits, ensure better HR practices, increase worker engagement, and build a vibrant organizational culture.
To learn more about growth strategies for the early stages of a business startup, reach out to Asure’s team of small business HR and payroll experts today.