As we dive into a brand new decade, it’s always worth taking stock of how far your small business has come over the years and to take the time to identify strategic improvements that you want (or need) to implement soon.
After hustling through the end of the year to wrap up necessary year-end payroll, compliance, and other tasks, sitting down to dive into strategic improvements might sound exhausting. However, a new year is always a great opportunity to review your business’s strategies and to put any chronic pain points under a microscope.
This is especially true for your internal processes, like payroll, recruitment, and human resources. Four strategies that can help any organization, including both nonprofit and small for-profit businesses, strengthen their internal processes for 2020 include:
- Make use of specialized platforms and outsourced services.
- Put more strategic thought into your HR processes.
- Prioritize flexibility in your compensation strategies.
- Take a more proactive approach to compliance.
Taking the opportunity to review your internal approach to these areas is a smart move for the new year since it gives you a roadmap of any upcoming obstacles that you might be expecting. Taking steps to start tackling those obstacles now is ideal, whether it’s through individual process updates or comprehensive strategy upgrades. These tips can help you lay out the groundwork for a stronger small business in 2020. Let’s get started!
1. Make use of specialized platforms and outsourced services
Tech and outsourced support can free up a ton of time and resources for your organization, and there are options available to handle practically any element of your internal operations. Many small businesses are already leveraging this strategy to some extent, but it’s worth checking to see if there are any ways to refine or expand your approach.
The market for these tools and services is constantly evolving and growing, so the perfect new option for your business may be waiting for you to discover it. This is a fairly broad category, so we’ll break it down into these two key groups:
- Web-based management tools or SaaS platforms to support your needs
- Outsourced services to completely handle an element of your internal operations
Both of these approaches offer long-term support around whatever gap your business needs filled (or wants taken off its plate). Depending on your exact needs, one type of solution might be the smarter choice, but the main idea is that today there’s no reason to feel compelled to handle everything manually or in-house. Small businesses, in particular, have a lot to gain from freeing up their teams to focus on more outward-facing or strategic projects.
Here are a few of the most common types of solutions that any type of organization can benefit from adopting:
- Accounting and payroll management software. As classic pain points for smaller organizations, online platforms (e.g., payroll software) and outsourced services can drastically alleviate the time and effort needed to complete these essential financial tasks.
- Human resources. HR itself is a broad area of operations, and it’s also something that many smaller businesses neglect building out while resources are focused elsewhere. With specialized platforms like talent management software, you can streamline a wide range of HR tasks that eat up a ton of time (or that you might otherwise ignore). Strong human resources frameworks are a secret weapon for businesses to grow sustainably, so it’s definitely worth exploring your options.
- Other internal and administrative tasks. Smaller internal tasks are likely your first targets when it comes to freeing up your team’s time. Recruiting is a good example of a strategically crucial area of operations that’s filled with time-consuming manual tasks. Working with a recruiting service or streamlining specific elements, like running small business background checks, can free up your time to focus on leading your team rather than constantly finding new members.
Of course, the right time to adopt any new tools or services will depend on your business’s particular context and needs. The main idea, though, is to think of them as long-term investments. Reducing your organization’s internal workload now while you’re still small can give your team a real cutting edge in your space.
2. Put more strategic thought into your HR processes
In the previous point, we touched on the idea that developed human resources processes can help to support more sustainable growth for small businesses. This is for a few key reasons. A strong HR framework gives your business:
- A strengthened sense of internal culture and purpose
- A more attractive employer brand, which supports your hiring goals
- Improved employee retention and engagement, potentially saving you tons of time and money over the long run
Building out concrete HR processes is an important investment for small businesses, but it can definitely be a daunting undertaking. “Human resources” is a very broad category of internal tasks and responsibilities.
Hiring a human resources consultant or firm is one option for full-service strategy development. For growing businesses, talent management software is an excellent way to simplify the process of building human resources and lay the groundwork for more strategic HR decision-making. That’s because it gives you a centralized record of your HR data and ways to automate or streamline HR tasks going forward. For example:
- Comprehensive HR data gives you detailed insights into your engagement with employees. What’s your retention rate? How does your turnover compare to similar businesses? How long does it typically take to fill particular roles? What’s your average per-employee cost for training? These insights and metrics can help to improve your recruiting strategies and create more accurate projections going forward.
- Comprehensive talent management software gives you access to streamlined hiring, onboarding, and performance management tools. These tasks are typically very time- and resource-intensive, so taking them digital and creating more self-service processes can be a much more efficient move over the long run.
- The rise of the “employer brand” as a major selling point for potential candidates means you need to be more aware than ever of employee engagement and the quality of your internal culture. Strengthened, centralized HR processes backed up by data help you make more strategic decisions all around to shape your culture in beneficial ways.
As many businesses look to downsize or outsource their human resources operations, it’s important to keep the bigger picture in mind. HR can unlock growth and stability for smaller businesses, but with the right approach it can serve more immediate strategic purposes, too.
3. Prioritize flexibility in your compensation strategies
Taking a more open and flexible approach to compensation can be a game-changer for businesses, especially growing businesses that implement this strategy early on in their development.
Specifically, we typically advise our own clients to adopt a Total Rewards style of compensation rather than focusing solely on salary and bonuses. Of course, direct compensation makes up a large and important portion of an employee’s total pay package, but expanding your view of compensation can be extremely helpful. It allows you to make more strategic decisions and better understand how a wide variety of elements fit together in order to make employees feel compensated and engaged.
In addition to direct compensation, this concept takes into account:
- Indirect compensation, like benefits, PTO, savings plans, etc.
- Your performance management style
- Recognition of achievements and contributions
- The quality of your internal culture and the work-life balance you promote
- Additional training and development opportunities you provide
Like many small businesses, nonprofits often struggle to represent themselves as attractive employers for candidates. The Total Rewards approach is extremely effective at combating this perception for organizations despite their inability to offer extremely competitive salaries.
The main idea is that by thinking of these more indirect and intangible elements as themselves forms of compensation, you can create more adaptive, flexible packages for employees. Of course, this doesn’t mean paying employees less just because you’ve decided your culture is a reward all its own. It does mean understanding the deeper reasons that employees stay engaged with your business, and these often have less to do with direct compensation than you might imagine.
For example, implementing a learning management system with additional training and certification opportunities for employees is a very direct way to offer scalable, high-value benefits that go much further to keep employees engaged than one-time bonuses. Associations often rely heavily on these systems to boost member retention.
Additionally, it’s important to remember changing generational preferences. Younger millennials and Gen Z employees generally prefer more continuous, direct, and casual feedback over intensive quarterly or biannual reviews. Adjusting your performance management structures to adapt to these kinds of preferences are definitely worth considering as the face of the American workforce continues to change.
4. Take a more proactive approach to compliance
When it comes to compliance, taking a more proactive approach to staying on top of things is absolutely essential. Letting something slip can be majorly detrimental to a small business, where the ramifications might be felt harder and more immediately.
A constantly changing legislative landscape has made it important to anticipate changes as they come and to be prepared. Specifically in terms of payroll and compensation compliance, you’ll need to cover all your bases and then consider:
- State-specific (and city-/local-specific) regulations. Take the time to brush up on your state’s labor guidelines. They may have changed, or one that you hadn’t needed to consider yet may become relevant for your business in the coming year. For instance, if your very young business loses its first employee, you’ll need to consider your state’s PTO payout laws.
- Changes at the federal level. Don’t let any new developments catch you off guard! One example is the upcoming changes to the FLSA salary threshold for overtime pay. This new policy starts in January 2020, so you need to determine (and ideally already have) if exemption status has changed for any employees.
- New options available. Weighing your options as new guidelines roll out can help you streamline your business and make the choices best suited to your particular context. For example, another change coming in January 2020 involves insurance benefits. The Individual Coverage Health Reimbursement Arrangement (ICHRA) gives employers new options to consider how exactly they provide health insurance to employees.
Beyond these types of compensation, payroll, and benefits guidelines, make sure to expand your scope even further.
It’s important to remember that pay discrimination, even when inadvertent, is illegal and puts your business in jeopardy. You can create more compliant compensation infrastructures and safeguard your growth by understanding pay discrimination and making structural and cultural changes as needed.
Running a business of any size is never easy work. The challenges come from all sides and never seem to quit, but that doesn’t mean your business needs to lock itself into the systems and strategies that worked in the past! At the top of the year, review your internal processes to identify areas for improvement. Especially when it comes to HR, even small changes can have profound ripple effects, saving you time, money, and worry as you grow. Good luck!