This article explains why HR systems for small business are important and how to develop one for your company.

If HR-related tasks like payroll and employee record keeping have become a burden for your small business, it could be time to implement a more structured HR system. Establishing an efficient HR system can help structure your business, drive growth, and foster a positive work culture.

Why do companies need an HR system?

Your employees are your business’s biggest asset. A well-structured HR system ensures they are managed effectively and that a positive and productive work environment is maintained. It also helps to keep your business’s daily operations running smoothly. HR systems for small business incorporate many processes and procedures vital to an organisation’s day-to-day functioning and help ensure compliance with relevant laws, regulations, and industry best practices.

Important processes that HR are responsible for include recruitment, employee benefits, training and development, legal compliance, maintaining records, dispute resolution, sickness and leave, and payroll administration.

Without an effective HR system, these essential tasks would fall onto the business owner or other team members, taking up precious time that could be more productively spent elsewhere.

What are the benefits of an HR system?

An organised HR system has many potential benefits. It plays a vital role in streamlining business operations and driving success. From start up companies to established enterprises, a robust HR system helps create structure within organisations of all sizes. From recruitment to payroll, an HR system can transform many different areas of your business operations. Let’s learn more about how an HR system could help drive growth in your business.

Organise and streamline HR operations – HR operations can be time-consuming, so having a system can help organise and streamline tasks. This then frees up time and resources for higher-value tasks that help to drive business growth.

Improve employee satisfaction and retention – An effective HR process can help to ensure employees are managed fairly and lead to a more positive work environment and company culture. HR systems for small business may also include the development of employee training programs, employee benefits, and incentive programs, helping to improve employee satisfaction at work.

Improve business efficiency and productivity – Efficient HR processes don’t just keep your business running smoothly; they also help improve productivity and workplace performance. They achieve this by streamlining HR processes, boosting employee morale, and managing employee performance.

Offer training and development – An important element of any efficient HR system is employee training and development. Offering training and development opportunities can help employees to improve their skills and knowledge and boost their performance in the workplace. It can also improve job satisfaction and retention rates.

Recruit top talent – The recruitment process is another important element of any HR system. A streamlined recruitment process helps businesses operate efficiently and projects an image of professionalism to help attract top talent.

How to create an HR system in a small company

Every business is different, and the exact process you need to follow to create an HR system depends on several factors, including the number of people you employ, your business’s legal and regulatory requirements, and your budget. The basic steps for establishing an HR system in a small company are:

Identify your needs – To begin, you must first establish your business’s core HR needs. You can then tailor your HR system to meet these needs effectively.

Appoint a designated HR person – Next, you must appoint a designated person to oversee your business’s HR. Depending on the size of your business and its HR requirements, this could be a part-time professional, a full-time one, or a team of people. Having a designated person who manages your business’s HR system can help to improve efficiency and consistency.

Develop policies, procedures, and processes – Company policies and procedures provide a framework for management and employees to refer to and help ensure compliance with relevant legal and regulatory requirements. They also promote fairness, minimise risk, and reduce the risk of disputes arising in the workplace. Some key company policies vital to any small business HR system include health and safety, disciplinary and dismissal, and grievance policies.

Create an employee handbook – An employee handbook helps to provide consistency relating to HR operations and provides all management and employees with a reference point for any questions about HR policies or procedures. An employee handbook may cover dress code, employee benefits, code of conduct, holiday leave policy, and how to report grievances. It should be written in clear and simple language, and all employees should receive a copy.

Implement HR Software – Depending on the size of your business and HR requirements, implementing HR software may be a cost-effective way to automate and streamline HR tasks like payroll and performance management.

Outsourcing – Some small businesses may find it more cost-effective to outsource certain HR tasks rather than hiring someone in-house.

HR systems for small business with People Based Solutions

Here at People Based Solutions, we offer small and medium-sized businesses a range of cost-effective, outsourced HR services for small businesses. Our HR professionals can help you to free up time and resources by assisting with HR tasks like creating company policies, procedures, and employee handbooks.

For more information about our services, or any information from company policies to workplace policies, call our Warrington-based team on 01925 202 217 or email Our local knowledge can be based on experience in dealing with certain areas of work to help with Health and Safety at your Warrington workplace. We can also travel around small businesses in Warrington, Liverpool, Manchester and beyond to cover our training and inductions.

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