A Guide to HR for Small Businesses: How to Create Amazing Experiences for Your Employees

The new world of work

Employees are the life force of any organisation. They bring the company’s vision to life by using their talent and skills to keep the business moving.

Sourcing, attracting, and retaining the best talent is more challenging now than ever. Business growth aspirations add pressure to hire the best in the market. And small businesses don’t have the resources to compete with the higher salaries that bigger companies can offer.

Companies are also becoming more creative with the perks they offer. Free or subsided lunches, remote working, and flexible schedules are common tactics to attract and retain hires.

Expectations from the workforce have changed too, as people now have more demands about how they work. Today, there are five – soon to be six – working generations. And there’s an increasingly contingent workforce including contractors and gig workers. Employers must embrace an evolving mix of expectations that come with managing such a workforce.

Digital technology has empowered many employees with remote working capabilities that they increasingly expect to use. The IWG Global Workplace Survey shows that when faced with two similar jobs, prospective employees would turn down the position that didn’t offer flexible working conditions.

THE IWG GLOBAL WORKSPACE SURVEY Welcome to Generation Flex – the employee power shift
THE IWG GLOBAL WORKSPACE SURVEY. Welcome to Generation Flex – the employee power shift.

Wellbeing is also important. Factors such as mental health, job satisfaction, and inclusion are high priorities as employees decide to stay with or leave a company. Meanwhile, 87% of professionals say a wellness policy is essential to them when considering new opportunities.

So how can your business keep up with these numerous challenges? The solution is a well-planned human resources (HR) strategy. By creating a plan that optimises the employee experience, HR leaders can keep employees happy, engaged, and invested in their roles. Experts claim successful engagement can lead to people being as much as 18% more productive.

This guide will explain the fundamentals of HR and help you navigate the challenges that small businesses face.

“Colleague engagement strategies have a big impact on productivity levels… my turnover is up, my profitability has doubled in the past couple of years, the number of people I have in the business has gone down by 30%. Interestingly, at the same time, my colleague engagement has gone up.” — Steve Cooper, Group CEO at C Hoare & Co”

Employee challenges for small businesses

Managing HR processes requires juggling many complexities. Looking after every step in each process is an involved responsibility that’s prone to time traps and errors:

  • Onboarding and managing employees at multiple locations
  • Spending too much time on admin, not enough focus on the business
  • Mismanaging data and using outdated systems, such as paper and spreadsheets
  • Complexities with compliance
  • Managing and balancing timesheets, absences, shifts, expenses, and payroll
  • Losing valuable employees and time backfilling positions

What is HR?

HR includes all the processes involved with sourcing, hiring, and retaining employees. It covers everything that has to do with managing your employees across the end-to-end employee journey – from the hiring stage to the point when they leave your company.

There are many processes in between these two stages that fall under the HR umbrella, such as:

How an HR solution can make life easier

Given all these responsibilities, it’s almost impossible to manage everything effectively without HR software. Today’s solutions use smart data to streamline HR tasks, so you’re using your time more efficiently.

Set up the basics. HR software enables you to upload employee data easily for less manual entry as employees acquire more data. You can also customise rules as needed for the likes of annual leave and other company policies.

Get better access to data. Most of today’s HR solutions are cloud-based, meaning you can access your account from virtually any internet-capable device. Cloud access allows you to:

  • Be more efficient and productive by reducing admin and working smarter
  • Improve engagement and retention with better employee experiences
  • Make better decisions with better insights from one single source of truth
  • Maintain compliance, another complex HR process

The employee journey

1. Recruitment: Find the right people/hiring

2. Onboarding: Get new joiners up and running

3. People management: Give employees what they need

  • Self-service
  • Manage personal details

4. General HR: Keep your employees organised

  • Absence and leave management
  • Expenses
  • Timesheets and scheduling

5. Performance: Manage performance and development

6. Communication and recognition: Engage and motivate

7. Offboarding: Say goodbye

1️⃣ Recruitment

Recruiting can be tough for HR leaders, due to:

  • Employment rate: When the employment rate is low, the talent pool is smaller. Candidates with the qualifications you need will likely be scarce. You’ll need to lure ‘passive’ talent—those not actively seeking employment—away from their current employer.
  • Candidate reach: Competition for the best talent is stiff, so you’ll want to cast a wide net by setting up multiple recruiting channels.
  • Inefficient talent sourcing: HR managers can spend hours combing through credentials of unqualified candidates before they find someone who fits their criteria.

To recruit efficiently, you need clear job requirements, descriptions, and advertisements. You need to find, evaluate, and organise top job candidates quickly to keep talent, and must offer a positive experience for the candidates.

HR software helps you do this by using smart data to filter through CV data that doesn’t match the job criteria. It will also help you attract passive talent.

2️⃣ Onboarding

Leading challenges with onboarding according to HR worldwide are:

  • Good monitoring of new employees.
  • An inconsistent approach to and application for onboarding across the organisation.
  • Lack of clarity about who is responsible for what portion of the process within the company.
  • Measuring the success and effectiveness of the onboarding process.

The same research shows 52% of HR practitioners worldwide are using technology such as HR software to involve the new hire more actively in the onboarding process. They also saw technology as the solution to save time during onboarding (38%), for effective communication (28%), to reduce admin (27%), and to gather data to improve the process (15%).

3️⃣ People management

People management involves engaging with and retaining employees. Employee engagement is a workplace approach for motivating employees and driving their passion, commitment, and effort at work. Engaged employees have a clear understanding of how their organisation is fulfilling its purpose and how they can contribute to it. As an HR leader, the more you know about your people, the more you can enable them to do their best work.

This isn’t an easy task, though. Engaging your workforce can be difficult because:

  • You don’t have data, so you rely on gut feeling
  • You don’t collect feedback from your workforce to gauge how satisfied they are with working for the company
  • You don’t have the data you need to support managers in providing seamless work experiences.

Advances in cloud and work-based technology enable you to create a data-driven approach to improve the visibility you have of your workforce. The data will inform how you manage and engage your people—allowing you to understand their behaviour better with actionable insights.

4️⃣ General HR

General HR includes regular processes such as absence and leave management, payroll, expenses, timesheets, and scheduling. It’s a lot to manage and there is no room for mistakes without jeopardising the employee experience. Common roadblocks are:

  • Data inaccuracies
  • Too much time spent on admin
  • No high-level view of employee schedule availability
  • Errors transferring data for different purposes, such as using timesheet data to calculate leave and payroll reporting.

Instead of having to manually key in employee data, you can use HR software to automate these tasks. This reduces inaccuracies and mistakes that negatively impact the employee experience.

5️⃣ Performance

Employee engagement doesn’t just involve recognising people for their efforts. It also leads to constructive feedback to build on their strengths and identify opportunities for improvement. Most organisations start with an annual review, which usually coordinates with the employee’s start date.

However, managers often criticise this method because it:

  • Interrupts the workflow
  • Is difficult to coordinate as new joiners start at different times of the year
  • Delays identification and resolution of performance problems
  • Doesn’t support an open dialogue between employee and manager.

HR software automates scheduling and offers better-organised preparation for all involved because everyone is aware of the review date in advance. You can customise your settings to use the same metrics to evaluate all employees so you can manage expectations sooner. And performance problems are more easily addressed because you’ve communicated the performance metrics upfront.

6️⃣ Communication and recognition

Communication and recognition are crucial for engagement and retention. Employees want to feel appreciated for the jobs they do, even above compensation in some cases. They want to feel their role directly connects to the success of the business. That’s why communication must be timely and clear to show the company respects and values each employee’s presence.

It’s challenging to communicate and give recognition effectively if:

  • You don’t have a way to measure how employees perceive your communication and recognition tactics
  • Your recognition and rewards efforts are infrequent or too frequent to hold value
  • Employees are unclear about how their role fits into the bigger picture of the business.

Pulse surveys are a great way of running a quick check on what’s working and what isn’t.

A lot of cloud-based reward and recognition tools offer smart solutions to managers to streamline their efforts. From instant recognition and robust internal communication to flexible reward options, cloud technology has made the act of recognition and appreciation effortless.

Your rewards and recognition tools should have well-defined criteria, maintain fairness and timeliness, and have variety. Keeping a check on these criteria becomes easier when you leverage technology to transform your business.

7️⃣ Offboarding

In the final stage of the employee life cycle, the employee leaves the company as a result of resignation, dismissal or retirement.

Offboarding can be tricky because, if not managed correctly, it can expose the business to many risks, such as:

  • Litigation from the former employee
  • Continued access to confidential company information
  • No compliance checks to close the gap
  • No structured handoff plan.

The process of offboarding employees can be as smooth and effective as onboarding. Developing strong procedures while having a clear workflow in place to join up functions such as HR, IT and payroll, in addition to evaluating what works and what doesn’t, can make all the difference to the departing employees leaving experience.

And by leveraging the benefits of an HR system to automate aspects of leaver processing, comfort can be achieved in knowing the factors that can go wrong are being handled at the right time, in the right way.

How CakeHR by Sage can help HR professionals and employees

Managing the employee lifecycle via a digital platform not only allows you to do the job much faster, but also reduce costs, enable greater collaboration, and access one database.

Until recently, companies organised their HR data on multiple platforms—a waste of time and resources when it was time to put together all the information taken from the various databases. Cloud software allows you to integrate various systems on to one platform, such as CakeHR by Sage, which completely transforms how you manage the HR function.

🟢 Better data management

The sheer volume of data flowing in from different employee touchpoints can be overwhelming. And HR data management professionals tend to fall victim to the sentiment “the more, the merrier”. However, it’s better to vote in favour of immediately actionable insights than angle for hyperbolic future payoffs, which take years to materialise and store inputs that promote redundancy and eat database space in the meantime.

🟢 Reduce inaccuracies

To maintain the integrity of the information that is used to influence HR policies, human resource information systems should have data validation rules. It can be something as simple as ensuring that the country codes of the mobile phone numbers of employees match their location.

Or it can be a more sophisticated check, such as automatically referencing the sick day count of a worker when a manager tries to input the value of bonuses or benefits. An error doesn’t have to be a glaring mistake. Innocuous oversights can also snowball into uninformed HR decisions.

🟢 Data security and compliance

With privacy regulations such as the GDPR, a breach from the outside isn’t the only issue HR leaders are managing. Inadvertent access to ‘sensitive information’ is still non-compliance.

Cloud-based software such as CakeHR by Sage helps you to adhere to data security mandates in a number of ways:

  • Data must be collected with employee consent. This is another reason why rampant integrations picking up employee details from third-party platforms must be dealt with carefully.
  • Employees have the right to view personal records that a company has stored. There must be the ability to pull a comprehensive document, spanning the systems that interact with employees and store related information, and present this compilation to employees – on demand.
  • Sensitive personal information includes biometrics, ethnicity, performance review data and annual assessment data. These are inputs that can be viewed and subsequently processed only by executives who can justify the need to do so. Data storage systems and databases have to go beyond encryptions to keep out malicious entities and thwart phishing attacks and graduate to evaluating access levels and permissions too for company staff.

HR leaders shouldn’t resist digital transformation. HR software is there to make managing HR easier so you can have more time to engage with your people.


HR management software app system CakeHR human resources
softwareadvice FrontRunner HRIS HR management software app system CakeHR human resources
HR management software app system CakeHR human resources
HR management software app system CakeHR human resources

CakeHR by Sage empowers you to take control of the HR function, not just react to changes as they occur. Learn more about how it can digitally transform your company’s HR function. 

Written By

Kaspars Upmanis

SaaS freak, CEO & Co-founder @cakehr