It is more important than ever to run a lean business. Costs need to be kept in check and the new normal is to be thrifty, productive, and efficient. Unfortunately, this philosophy has to extend to payroll and headcount, every position needs to be justified and add value. 

It is critical to regularly assess your employees and ensure that they are performing and growing, i.e. they are a contributing factor to a healthy work culture. One that runs as a meritocracy in which “good” employees are recognized, promoted, or empowered and “bad” employees are quickly discovered and removed from the environment. This is a foundational factor for a company that wants to stay lean and effective. 

The most common way to evaluate employee output are Key Performance Indicators or KPIs. A KPI puts a number to reflect how well that individual is achieving their stated goals and objectives. For example, if a goal is to provide above average customer service, you could use a KPI that targets the number of unsatisfied customer support requests at the end of each week. This measures progress towards an objective.

While KPIs are extremely important, managers may overestimate their value as some jobs are difficult to quantify. Looking back at the previous example, perhaps the customers the employee did serve were very satisfied and will return because of the staff’s attention, patience, and care. 

There are several other ways to evaluate an employee’s performance, such as:

• Quality of Output
• Creativity of Output
• Improvement over time
• Team and customer feedback
• Percentage of tasks completed

Owners and HR managers must decide on a holistic approach that combines KPIs with the individual behind the numbers. Further, they must also agree to apply the same methodology across the board to all employees. This requires an honest look at the worker and is usually backed by the numbers. 

It is important to maintain a regular schedule when assessing employees. While quarterly evaluations are ideal, they are time consuming and deflect attention from the core business. One should aim for assessing employees twice a year and seeing changes and improvements in the employee’s KPIs, attitude, and engagement. 

Conducting assessments and analyzing the results is the first step. Taking concrete and constructive action is the next one. If an employee is consistently underperforming it is imperative to understand the root cause. Perhaps the KPIs were not communicated to them or  they do not feel challenged enough, maybe the company has not offered them the right training. Similarly, single out exceptional staff members and understand the factors helping them succeed. Do they have a cheery disposition? Are they extra hard working? Are they working on commission? You may be able to apply some of this learning towards your other employees and turn their collective frown upside down!    

One of the biggest reasons to permanently transition to a remote workforce is an immediate reduction in expenses as less office space and a lower number of resources are used. Which is supported by a weaker marketplace in which every sale is competitive and disposable income is minimal. 

Two factors to consider when managing a remote workforce:

1. Maintaining a streamlined workflow
2. Integrating project management tools

The tools usually come with their own costs and risks. Further, having the tools is one thing, using them effectively is another. You need to have (and hire) a staff that supports the use of the tools at their disposal. 

While the idea of a traditional office with physical staff may seem quaint in these tech-driven times, the truth is that even the tech giants maintain headquarters and on-ground staff. This is because a shared workspace is still the best thing for communication and ideation. 

An office allows workers to grow together resulting in strong interpersonal relationships that foster teamwork and lead to a productive energy that can not be replicated by machines. Those lighting-in-a-bottle sessions which excite and engage workers are very difficult to duplicate online.   

There are some roles that require an employee to be, both directly and indirectly, in touch with the market. Sometimes they are required to be physically present or in terms of being “in the know” by mingling with others and discussing the trade. Tech solutions to mitigate both of these things exist but most argue they are still not there yet. 

In short, a remote workforce may cut expenses on the front-end (rent, etc) but it comes with other costs and potential pitfalls including a deterioration in communication and quality. One needs to analyze the specific role and understand its dynamics to conclude whether it can be performed well remotely. 

HR’s tasks are wide ranging and span across the business. Interviewing, hiring, and onboarding are the most common functions but not all of them. Handling employee training and concerns, managing payroll, and ensuring legal compliance are all essential human resources tasks. Essentially, HR becomes a link between employer and employee, and also acts as an arbitrator who prevents or resolves workplace issues.

The question now for managers and owners: is the time required to handle all of those staff-related issues worth your time or is it better for the company for you to focus on growing the business and running day-to-day operations?

Organizations with less than 20 employees are often better off when the owner delegates HR responsibilities to someone else, experts say. One school of thought says the general organization of your business is an indicator as to when you need HR. As a business grows and roles and departments become formalized, that’s when HR needs to be brought on. Another school believes headcount is the indicator to listen to – once the business has between 50-100 employees is when a human resources department should be considered.

Perhaps the most important factor is by focusing on revenue and asking “Would my time be better spent growing the business?” If you can use that time to generate additional revenue then the cost of a new salary is worth it.

Another important factor to consider is that HR deals with a lot of paperwork that requires precision and dedication. If a business owner is barely coping with the responsibilities of running the business and managing HR, they could find themselves in record-keeping trouble fast. Important paperwork, up-to-date records, archived materials are just a few of the backend things HR deals with and that need to be exact as documentation issues can quickly balloon into legal problems.

It is not only important for business leaders to delegate at the right time, you should also consider whom you’re entrusting with this work and how they will add value to the position, department, and company.

Finally, if you do decide to start an HR department, you need to find someone who is discreet and can be trusted, is organized, and is an empathetic listener who can properly guide employees. Ideally, that person would understand and appreciate small business and have experience in that environment.