10 Fundamentals of Human Resource Management
People wearing the HR hat who do not want to be wearing the HR hat generally feel one of two things: bored, or scared they are going to go to jail (or so they’ve told us!). This is never quite the work they want to be doing or the work they feel comfortable doing, and it all feels a bit … mucky.
We call this the HR swamp, and we created this guide to help.
So how did you find yourself in the swamp?
You’re likely a founder, a head of ops or finance, or the do-it-all office manager or executive assistant.
You’re at a growing company that has plenty of HR needs, but you do not yet have an HR department of your own.
You’re figuring things out as they are asked of you—either by an employee or an ominous letter from an official Department of Government Something.
You’re often thinking, “I just don’t know what I don’t know”. (That’s the most common thing we hear from folks in the swamp.)
Like any field, HR is always evolving (ahem, pandemics), but we’ve created the guide below to help you get your bearings. We’ve defined the top ten fundamentals of human resource management, along with benchmarks, examples, and resources along the way:
Talent Acquisition
Hiring & Onboarding
Compensation, Benefits & Rewards
Payroll
Engagement & Development
Performance
Policies
Issue Escalation
Compliance
Offboarding
Talent Acquisition
Employer Branding
This is an emerging term that encompasses the strategy and tactics used to attract, engage, and retain ideal employees, discussed at length here. We’d encourage you to start with an Employee Value Proposition (EVP) and a clear mission, vision, and values. If you don’t have some of these things yet, start with a simple one-page strategic plan.
Careers Page
Using text, photos, and video, this page on your company website should clearly articulate your EVP and link to any current job openings. Typically one of the most highly-visited pages on a company site, consistent branding goes a long way here, but keep it genuine (no stock photos!). Remember, it’s not just prospective employees taking a look—customers will frequent this page as well. Some world-class examples include Mailchimp, TaskRabbit, and GrubHub.
Job Descriptions
Remember you are writing these for actual humans. Use plain language and write like you're explaining the job to a friend. Copying and pasting bullets from existing (read: boring) job posts is a surefire way to blend in to the sea of opportunities out there. And whatever you do *soapbox alert*, avoid silly terms like “rockstar”, “guru” and “ninja” that don’t explain what the job even is. When finished, consider using a tool like Textio to scan your posts for inclusive language. YNAB has some of the best job descriptions we’ve ever seen.
Recruiting
Recruiting is one of the key fundamentals of human resource management. Unless your company is already a well-known brand, simply posting open positions might not produce the results you need. In these instances, you may want to contract with a recruiting firm. Most recruiters operate via a “contingency placement fee”, in which they get an agreed-upon amount once a candidate is hired (typically 15-20%). Some recruiters will offer “zero-fee recruitment” in which they are simply paid by a flat monthly or hourly rate. Need a place to start? Check out Fireseeds and Resource Wranglers.
Applicant Tracking System
An applicant tracking system, or ATS, helps you organize candidates during the recruitment and hiring process. These systems allow you to organize and filter prospects as well as respond automatically and in a timely manner, which greatly improves the candidate experience. Spreadsheets and Google Calendar only work for this process so long, and eventually, an investment in an ATS makes sense for any business that wants to hire more than a handful of employees. A great ATS option for growing businesses is JazzHR.
2. Hiring & Onboarding
Offer Letters
As you grow, it’s important to have comprehensive and consistent offer letters for all of your employees. While thorough, these do not need to be excessively long. Make sure you include the key items such as start date, salary, any additional benefits, and how time off will work. You can download a free template here to get started.
Onboarding Process
The onboarding process is really two-fold; there’s the employee’s onboarding experience, and then there’s the paperwork.
There’s no feeling more deflating than being bored or unclear your first week in a new job, so map out the first few days well. Schedule meetings. Assign learning opportunities and small projects. Welcome the new employee to the company by introducing them in Slack or your communication tool. Consider concluding the week with a meet and greet or Q&A with the founder or CEO, if possible.
When it comes to onboarding paperwork, any good payroll system should collect the basics—an I-9, a W-4—for you.
Welcome Kit
You only get one chance to make a first impression! A welcome kit is an opportunity to make your new employees feel welcome while boosting your employer brand. It can include necessary supplies like a laptop or webcam as well as swag items (t-shirts! mugs! backpacks!).
One organization we worked with surveyed new hires and used this information to personalize the welcome kits with things like an employee's favorite snacks (Snack Magic is a resource we found that makes this process even easier.) Surprises like this get people excited to work for you while letting them know you see them as a human being, not just an employee.
3. Compensation, Benefits & Rewards
Compensation refers to the direct pay an employee receives for the work they do. Typically this is called a salary. Benefits refer to indirect pay and encompass things like health insurance, stock options, profit-sharing, or retirement contributions, as well as social benefits such as vacation, tuition reimbursement, or parental leave.
Health Insurance
Employer-sponsored health insurance is a health policy selected and purchased by a company and offered to eligible employees and their dependents. Just because you offer health insurance does not mean you have to pay for the entire portion. Many organizations share this cost with employees.
Many payroll systems will offer benefits programs or you can work directly with an insurance broker. (We work with a variety of brokers depending on company size and industry, but Josh Anderson and Jeb Blazevich are two of our favorites.)
No law directly requires employers to provide health care coverage to their employees. However, the Affordable Care Act imposes hefty penalties on employers with 50 or more full-time employees that fail to provide health insurance.
Total Rewards
A “total rewards” strategy combines compensation and benefits with personal development opportunities. By illustrating the full value of an employee’s rewards package (think pie chart), employers can attract and retain talent with more than just a competitive salary.
4. Payroll
Payroll System
A payroll system is a software to automate the payroll process. These systems can be integrated with leave and attendance tracking systems and employee self-service portals to keep track of things like accrued time off, raises, and promotions. A product like Gusto is tailored to growing businesses and is quick and easy to implement, whereas more robust products like ADP are tailored toward enterprise companies.
Human Resource Information System (HRIS)
An HRIS is simply a software suite designed to help a business keep track of all the HR-related activities that must be done, such as payroll, benefits administration, applicant tracking, and compliance. There has been a convergence of late where most products that did one thing (payroll for example), now do multiple things and are thus classified as an HRIS.
Companies can shop for benefits using their HRIS or a broker, who may offer personalized suggestions.
5. Engagement & Development
Engagement Surveys
Simple engagement or pulse surveys sent via email or even Slack at least once a year can give employers a feel for employee satisfaction while also giving employees an outlet to express concern. These can easily be cobbled together in Google Drive or Typeform and administered by a third-party partner (likeSame Page), or these can be managed by a service like15five orCulture Amp.
Learning & Development
We find that learning and development opportunities are most effective (and enjoyed) when they are proactive, not reactive to an issue. Examples of learning and development facilitators or tools include Life Labs Learning, Strive, Wildsparq, and The Diversity Gap. Assessments like The Birkman are also helpful learning and development opportunities.
6. Performance
Performance Reviews
Performance reviews can be an integral part of a high-performing, engaged culture, but many do more harm than good—making them one of the most important fundamentals of human resource management. The key is to make them a part of an ongoing, larger effort to support and develop employees.
While many organizations tie compensation to the performance review process, we believe in keeping these separate. Performance reviews that are tied to compensation create a “blame-oriented” culture and tend to demotivate rather than motivate. (You can read more about this here.)
One of our favorite versions of performance management is the EOS Quarterly Conversation methodology.
Performance Improvement Plans
In a perfect world, you would hire the right people and they would always perform, but we know this isn’t always the case. When an employee is underperforming, you may want to develop a performance improvement plan, or PIP.
Used correctly, a PIP is not a punishment or a “gotcha” document, but rather a tool to give an employee with performance deficiencies the opportunity to succeed. It may be used to address failures to meet specific job goals or to ameliorate behavior-related concerns. Below is an example of a 90-day performance improvement plan, courtesy of Lattice.
Always start with a conversation about the performance, and then make sure your PIP contains these important components: a clear explanation of performance deficiency, defined quantifiable standard for improvement, a deadline for improvement, and consequences if improvement is not shown.
Lastly, remember that performance improvement is a two-way street—be sure to document the specific resources and support you as the employer will provide.
7. Policies
When it comes to policies, write them down, keep them updated, and make them easily accessible to employees. (Note: these goals are rarely accomplished at small, growing businesses!)
Keep it simple and start with these five policies:
Paid time off (PTO)
How to report an issue
Parental leave
Code of conduct (in office or in a remote setting)
Progressive discipline policy
You can create a simple version of an Employee Handbook in Google Drive or Notion, or you can use a tool like Blissbook to make it more branded and easy to digest.
8. Issue Escalation
Have a clear point of contact that is not an employee’s boss nor the founder, if possible. Note who this contact is in the issue escalation policy in the Employee Handbook.
Engage an HR pro or an employment lawyer if you are in the midst of a contentious termination or if there is the threat of a lawsuit. Same Page offers one-time or scheduled monthly HR consultation; Greg Hare at Ogletree Deakins is a good starting point for legal counsel.
9. Compliance
Unemployment Taxes
In many instances, terminated employees may file for unemployment benefits. The money paid out comes from unemployment insurance, which is funded by those payroll taxes your company pays to the government. Unemployment insurance is managed by both federal and state governments. Each state has its own unemployment insurance program, which the federal government oversees. As each state has its own rules for administering unemployment benefits, it’s important to know what they are if your company has locations in multiple states.
You may receive an Unemployment Claim after an employee is terminated. Often your state’s Department of Labor will ask you or someone in HR to complete a questionnaire that details the circumstances of the claimants termination. It’s no reason to panic. Just complete the form and get it back to the DOL in a timely manner.
Exempt vs. Non-Exempt Employees
The primary difference between exempt and non-exempt employees is that non-exempt workers are entitled to certain protections under a federal law that established minimum wage and overtime requirements. This law is known as the Fair Labor Standards Act and is often referred to as “FLSA”.
Employees exempt from the FLSA typically must be paid a salary above a certain level and work in an “administrative, professional, executive, computer or outside sales role”. The Department of Labor (DOL) has a duties test that can help you determine who on your team meets this exemption criteria.
An exempt employee is not eligible to receive overtime pay, and is excluded from minimum wage requirements.
Unlike exempt employees, non-exempt employees do get overtime pay any time they work more than 40 hours per week.
Employees vs. Contractors
You must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee. You typically do not have to withhold or pay taxes on payments to an independent contractor.
Contractor misclassification is one of the single biggest reasons for employment lawsuits in the United States. You can read more on this important topic here or give us a call if you have questions.
Workers Compensation Insurance
Workers Compensation Insurance, often referred to as “workers comp”, is insurance carried by an employer that provides medical and wage benefits to people who are injured or become ill at work.
In many states, if you have one or more employees you are required by law to carry workers compensation insurance—no matter the type of business you are in (many people think of workers comp as a “blue collar thing”, but this is not the case). There are some states where workers compensation coverage isn’t required until a company reaches three or more employees. You can review the laws in your state here.
Even if you are not required to carry insurance, you may still be responsible for the costs of a workers' compensation claim, so it may be advantageous to carry coverage even if it's not required for your business size.
10. Offboarding
Make a checklist so you offboard the same every time. Remove the employee from all of your systems. Get their key, credit card, etc. Properly transfer their email address and any Google Drive data.
Exit interviews
We recommend that someone the employee did not work for directly lead these. What you’re really looking for are ways to improve your business. Why are they leaving? What suggestions do they have for improvement?
You do not host exit interviews with someone you are terminating but rather just for employees who choose to leave.
Separation Paperwork
This often-forgotten step saves headaches when you receive Unemployment claims. Paperwork varies by state; this article helps clarify what you may need to do.
Need Help With These Fundamentals of Human Resource Management?
Need help putting any of these into practice? Same Page offers two levels of HR support for companies without an HR department of their own. From building an HR Framework to fully administering the HR functions listed above, Same Page is built to support those wearing the HR hat who never intended to fully wear the HR hat.