Regardless of the size of a business, investing in human resources can help you recruit and retain the right people to help your business succeed. If you watch over 20 CEO interviews, you’ll undoubtedly notice the grand majority of them (if not all) will attribute their success to their people. In this article, we’ll review ways you can invest in your people without breaking the bank.
Benefits of Investing in Human Resources
Studies show that happiness makes people more productive at work. Researchers from the University of Warwick discovered that happiness made employees around 12% more productive than employees who aren’t satisfied at work. Also, they discovered that happy workers use their time more efficiently, increasing the pace at which they can work. Hence, providing your staff with some additional perks and attention will make them happier and that will result in increased productivity and ultimately better work performance.
One of the hardest things to do when running a business is hiring the right people. It’s not just about finding the smartest or most skilled person for the job. You need to find someone with the skill and WILL to do the job better than 90% of the job candidates. According to Daniel Pink, you can’t buy a person’s”willingness” to do a good job. You need to recruit someone who believes in the mission and will feel they are having a real impact in the workplace. A human resource partner or manager will help you stay disciplined when recruiting new people, and prevent you from falling into the trap of hiring someone because you simply “like” them or share the same hobbies. When you recruit right and create an environment for your employees to succeed, you’ll see they’ll treat every customer or company stakeholder as if your company was their own.
Work satisfaction isn’t only related to higher productivity per employee but it also results in a lower turnover rate, which refers to the rate people leave within a year of employment. Some jobs, like call center agents, have turnover rates above 100%. In this example, some call center managers decided to let their agents work from home, which resulted in a reduction of the turnover rate by 30%. Now companies that work in this industry do not need to replace their entire workforce over the course of the year, and focus on training and supporting their staff.
These were just some main benefits of investing in human resources, but there are many others. However, the key question here is: what are best the ways to invest in your workforce when you own a small business?
5 Ways to Invest in Your Human Resources
Once you are ready to bring your business to a higher level, it’s time to consider some things you can do to make your employees happy.
1. Retirement plan
A retirement savings plan is one of the benefits that employees appreciate the most. It’s not surprising since financial security means so much these days. However, there are many options, so choosing the right retirement plan can be difficult.
Basically, there are 4 types of retirement plans that small-business owners might consider:
- Simplified Employee Pension Plan (SEP IRA)
- Savings Incentive Match Plan for Employees (SIMPLE IRA)
- Self-Employed 401(k) plan
- 401(k) plan (better for larger companies given setup costs, administration, fiduciary responsibilities, etc.)
The first three are more suitable for very small businesses—typically, 100 employees or less. On the other hand, for a traditional 401(k) plan, small and medium-sized business should spend $5,000 to $10,000 per year, but there are also some simple plans that cost $500 to $1,000 per year. It would be good to calculate the 401(k) price plan for yourself because it varies in many factors. (Source: Fidelity)
Each of these four plans has different characteristics—such as the ability to cover employees, contribution limits, and administrative responsibility. To choose the right plan for your business, you need to understand the nuances of these plans and match them to your priorities.
Training is a great way to invest in your workers’ knowledge and abilities. It’s also an excellent way to express your appreciate your employees: they’ll feel you didn’t hire them only for their set of skills, but because of their potential (even if it needs to be polished). Nowadays, there are plenty of online courses that offer specializations in different areas and they are usually free or pretty inexpensive. For instance, on Coursera you can find business courses that are free or start at $29. Another useful learning platforms are Lynda (1-month free trial then $21.99/month) and the Kutztown University of Pennsylvania (free). Also, for very little or no money at all you can organize internal training, workshops and mentorship programs where more skillful employees can pass their knowledge and educate others.
3. More vacation time or paid time off
This is one of the benefits that ranks high on employee surveys. Taking some time off improves the physical and mental employees and it is directly connected to their work performance. Likewise, this small pause has shown to provide workers a boost in creative problem-solving. Consider this as investing in your staff private life and contributing to their work-life balance. If you can’t afford paid leave, you have alternatives: you can dismiss your employees earlier on certain occasions or when an accomplishment have been achieved, or organize fun activities like happy hours after work or informal gatherings. Not only your employees will appreciate your gesture, but also they will have the chance to interact with you and among themselves in an informal setting. This can lead to stronger relationships even boost creativity. Need some ideas? Set up a picnic in the closest park, organize a family day, or encourage everybody to participate in a dart or bowling competition.
4. Motivation and engagement
Ask regularly for new ideas and feedback, reward creativity and encourage out-of-the-box thinking. The next big idea for your company could be brewing in the mind of the person who you less expected!
Challenging your people is part of keeping them motivated. Support their pursuits, reward continued learning and highlight those with unexpected ideas from. Much like a kid, the only way for your business to grow is to continually enrich and educate yourselves. Organize friendly competitions to see who sells more, gets more leads or engages more customers. Don’t forget to reward properly!
And as we have mentioned before, when your employees are happy at your company, they will stay with you, therefore saving you the time and money to hire new employees.
5. A Software HR Solution and a Performance Management System
Small business owners tend to waste a lot of valuable time on administration tasks because they don’t feel the need to substitute their informal approach to business solutions (that is, a stack of paperwork in a cabinet) for a proper software system. Is this your case? The chaos and boring, time-consuming tasks could, in the long run, hurt your passion and energy for running your business.
Consider investing in a good HR software solution, which can help you stay organized and handle common HR tasks like recordkeeping, payroll, and employee performance management. With prices starting at just a few dollars a month, this is an investment that can quickly pay off if.
Here are some of the key features that business HR software can offer, among others:
- Employee Record-Keeping. It keeps copies of important records for your employees.
- Benefits Administration. Employees can enroll for benefits and manage their options from within the software.
- Recruitment. Use the software to keep track of job applicants and manage the recruitment process.
- Training. Some packages let you plan your employees’ training and development needs, and sometimes you can even integrate training into the app itself.
- Time and Attendance. You can manage your employees’ vacation requests to make sure you have adequate cover.
- Communication. You can pass on important company news to your employees, and allow them to communicate with each other through blogs, message boards, etc.
- Self-Service Options. Let employees log on and do things like update their details, request time off, etc.
- Mobile Access. Let employees access the system through a smartphone app so that they can check in and upload information while on the move.
- Performance Management System. Tracking, reporting, and reviewing your employees’ performance are key features of any HR software solution. It will allow you to keep track of your employees’ performance year by year, set new goals and objectives, and have access to their whole development history. Employees need defined roles and goals to remain engaged and motivated, but once those goals are stated, it is equally as important to check in regularly to ensure they’re being met. Knowing how your people are performing is a key component in tracking your business’ overall performance.
There are plenty of software HR solutions in the market: you’ll need to do some research to find for the one that bests suits the needs of your business and your budget. BambooHR, Zoho People, and People offer you free trials, so you can easily shop around before making your decision. (Source: Envato Tuts)
We have given you 5 ways to invest in human resources. But, above them all, can you guess what’s the best, and by far the easiest, to improve your workforce? Just ask! As simple as that. Ask your employees what is that they need to be happier with their job. You’ll be surprised –and delighted! to know it’s not always a raise. Maybe it’s a conference? A well-deserved day off? Some software or tool to speed up their work? You’ll never find out if you don’t ask.
Successful Companies that Invested in Human Resources
Without a real case scenario, all this is just a theory with statistics and recommendations. It’s time to see the results of investing in employees in practice.
CarMax, a used-car retailer company, invested a lot in employee programs, during the 2008 recession. They enhanced their training and development programs. Also, CarMax company turned to workers ideas in order to improve their customer service which was rewarded by employee recognition program. As the result, sales went up 116% in eight years, or 14.5% annually.
Nissan is known for its use of a concept called “kaizen”. Kaizen is a key philosophy of Nissan that empowers the workforce to continually improve the way the job is done. Nissan implements this philosophy when choosing each production worker. The teams recruited are the best of their kind and each member is geared toward improving their skills to shine above the rest. The HR practices at Nissan include transparent salary scales and full autonomy for leaders to recruit and build their own teams.
From Fortune to Mashable to Glassdoor, Google is consistently ranked as the best company to work for in the world. What truly makes Google a great place to work is the people. The company is more than just an Internet juggernaut, its Mountain View, California headquarters offer a seven-acre sports complex, three wellness centers, indoor roller hockey rinks, horseshoe pits, and over 100,000 hours of subsidized massages doled out each year. Google’s philosophy is that with the right tools, you can attract the best talent, and develop happier and more productive employees. With these HR efforts, Google’s leadership is recognized worldwide. (Source: Human Resources MBA)
Don feel intimidated by the examples above. Your business doesn’t need to have the size and magnitude of these 3 giants to follow their lead. Think that Google, the world’s most famous search engine, and multi-billion company, was actually started in a garage by two young Ph.D. students. Everybody has to start somewhere!
To sum up
Your employees are your most valuable resource, therefore, investing in them can have a positive impact on your business. Making your personnel happy, investing in their skills and knowledge, helping them achieve financial stability and work-life balance can only lead to better productivity, more quality service and increased revenue. This is a long-term investment that requires some effort and money from your side, but in the end, it will pay off.
You may be thinking of this: “What happens if we invest in developing our employees and they decide to leave us?”. But instead, ask yourself this: “What happens if we don’t, and they stay?”