Cash flow is, of course, a big concern for big companies and startups, alike.

But when a micro business starts growing, it’s time to anticipate needs for human capital – employees.

Because employee costs are normally the biggest single expense, some businesses are tempted to put off implementing best practices.

That includes eliminating or delaying the launch of human resources programs.

In the 21st century, HR involves a lot more than just recruiting and hiring employees.

This is especially true in this increasingly litigious environment with complex state and federal laws.

So you must exercise due diligence. You can’t afford not to be careful — for moral and legal reasons you must avoid EEOC lawsuits.

You can start an HR program affordably – with one of your key staff members, a part-time HR person or a consulting firm.

Here are four points to remember:

1. Recruiting, hiring and firing

If you’re personally trying to handle all HR responsibilities, you have an expensive HR department. Instead, you’re best suited to invest your time in growing and operating your business.

You’re better off with someone who will focus on recruiting, screening resumes and applications, scheduling interviews, background checks, hiring the best talent and maintaining records.

Should you have to fire employees, you must ask yourself three important questions.

All of this takes time and energy. Plus, a wrong hire will cost you a lot more in the long run.

2. State and federal laws

Employment experts know the laws and can prevent problems. Again, just one simple error can cost you an expensive lawsuit.

For example, businesses have to post and update federal information about the Family and Medical Leave Act, Occupational Safety and Health Administration, and the Uniformed Services Employment and Reemployment Rights Act.

Oh, and there’s more information to be posted such as your state’s minimum wage, unemployment insurance, and workers’ compensation.

3. Employee records

You must maintain at least three folders for each worker. They are an I-9 file, employment file and a medical file.

The folders must contain accurate, updated information.

(Not required but to make your job as a supervisor easier for when you ultimately conduct personnel appraisals, one other file is recommended to store in your desk — to help you keep track – an informal file for each employee to be updated as you learn when the individual is found doing something right or wrong.)

Paper trails will help you sleep at night, and will protect you if something goes awry in dealing with employees.

4. Handbooks/manuals

You’ll need an employee handbook—even for a minimal staff. The handbook should contain your expectations, regulations and rules. In effect, it’s a great insurance policy.

Employees will better understand what they need to know about working for you. Moreover, a handbook might be needed as evidence should a legal situation occur.

By the way, an experienced employment attorney should review your handbook, no matter writes it.

As the old Nike slogan suggests: “Just do it.” Don’t take any shortcuts. You’ll save a lot of headaches.

From the Coach’s Corner, here are related management tips:

Management and HR for Higher Performance — Part three: How to grow your small business. In analyzing the growth rates of small businesses – every great entrepreneur has one salient quality – the ability to be an effective manager.

Avoid the 5 Biggest Mistakes SMEs Make in HR — If you manage the typical small or medium-size enterprise (SME), you’ve got your hands full just trying to stay profitable. So it’s imperative to be careful in dealing with your biggest expense – your employees.

Increase Profits by Hiring Talent with the Best Trait — Enthusiasm — You’ll increase your odds for profits with high-performing employees with the right culture — if you hire for the right personality trait – enthusiastic people. That’s right. Look for people who have the makeup to being committed and who will care for the welfare of your company. You’ll increase your chances for the strongest results.

Are You Guilty of Micromanaging? Here’s How to Stop — Micromanagement is a ramification of ignoring best practices in management. People who micromanage lose maximum efficiency, productivity and teamwork – in other words, optimal profitability.

Unpaid Interns: Safeguards to Avoid Legal Issues — Many students will work for an unpaid internship, if they can further their career prospects. They know they’ll benefit from training, business networking or getting a job with the companies once they graduate from college. But unpaid internships can be risky for a business. Here are the safeguards.

Hiring a Personal Assistant? Hire for 8 Qualities — The right choice of a personal assistant can make a huge difference in your operation. Basically, you need someone who can manage you – represent you well in a variety of tasks – an assistant who can make you look good.

“The smallest seed of faith is better than the largest fruit of happiness.”

-Henry David Thoreau


Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.