Updated: November 2020
What are HR Best Practices?
Although every company is different and has its own unique needs, we believe that there are basic HR practices and principles that should be foundational to every good business. The idea of HR best practices is that there are some universal principles that help optimize and legitimize any business to which they are applied.
Many of the HR best practices we’ll cover today have been around since the beginning of the world of business. There are certain principles that are truly foundational and apply across all industries and time periods. There are other HR best practices that are newer, and fit a more modern style of work.
Additionally, we know how the COVID-19 pandemic has changed the way we work and has, in some ways, permanently shifted employee expectations. The HR best practices of 2021 need to reflect these changes and get your business prepared to serve the employees of the future.
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How Are HR Best Practices Shifting in 2021?
The global pandemic of 2020 has caused businesses to rethink many aspects of their operation. Many businesses that would previously never consider working remotely now allow some or all of their employees to work outside of the office. Businesses that had never previously used internal communication software are now experts when it comes to software tools like Slack or Zoom. Employers who still have employees working in the office now need to focus more on workplace safety, sanitation, air purification, and the layout of the workplace.
All these changes have shifted the way we work and are forcing HR teams and departments to re-think and revamp some of their best practices for 2021. Our list below takes these concerns into account and helps you understand the practices and principles that you should consider as you evolve the way you work.
HR Practices vs. HR Activities
So is there a difference between HR practices and HR activities? Absolutely there is. Think of HR activities like the daily tasks that get completed by you or someone on your team every single day. HR activities are checklist items that would fall under the umbrella of a sound HR practice.
For example, in our list below, we talk about ensuring fair compensation for your employees. A task or activity under this practice is running payroll. Other common HR activities include conducting employee surveys, writing rejection emails to job candidates, calculating paid time off balances, and tracking employee overtime hours.
While all of these activities are critical for a business to function properly, they’re just that–activities. The practices found on this list embody many of the activities that are completed on a daily or weekly basis.
Once you have the right practices in play, the activities that correlate with those practices should follow. Having the practices without the activities (or vice versa) is like having a car without an engine. The car needs the engine to run, but the engine also needs a vehicle to power.
The best human resources teams know how to strike a balance and optimize both practices and activities.
Some of the best small and mid-sized companies are choosing EddyHR to help manage their people, processes, and payroll.
Top 11 HR Best Practices in 2021
So what are the 11 HR best practices that you should be striving for in 2021? Again, it’s hard to say because every company is unique and has its own individual needs. However, we believe that implementing some of these practices will give you the biggest return on your investment. If you’re looking for ways to improve the business, improve your HR processes, and create an environment where customers are happy and engaged, we recommend the following 11 HR practices:
- Hire Great People
- Onboard and Train for Success
- Prioritize Workplace Safety
- Create Open Communication Channels
- Compensate Employees Fairly
- Manage Employee Performance
- Offer Quality Employee Benefits
- Reward and Recognize Outstanding Employees
- Create Flexible Work Opportunities
- Use Cloud-Based HR Software
- Practice Fair Termination Policies
Let’s dive into each one of these individually and analyze why each of these practices is critical for success.
1. Hire Great People
People are the heart of any great business. Your first priority as an HR professional should be to bring the very best people into your organization so that they can contribute to the culture and success of the company.
Of course, hiring great people is easier said than done. In order to hire the best, you need to ensure that you have great hiring processes in place. If your hiring process is lackluster, or if you fail to communicate quickly and effectively, you’ll miss out on some of the best candidates.
When you think specifically about the hiring process, try to put yourself in the shoes of your candidates. Ask yourself, “what’s the candidate experience like?” Are they well informed about where they stand? Did you communicate with them quickly and show interest and excitement about their application? Did you make them feel comfortable and appreciated in the interview? Take the time to really understand the candidate’s experience so that you know where to make improvements.
2. Onboard and Train for Success
Once you get great people in the door, it’s your job to help set them up for success. Starting a new job at a new company can be a challenging transition for anyone, even the most seasoned professionals. When you hire new employees make sure you have an onboarding process in place. Remember, up to 20% of staff turnover occurs within the first 45 days of employment. This is due to weak onboarding and training.
Your onboarding should begin before the new hire’s first day of work. All important documents such as the employee handbook, the I-9 form, tax documents, NDAs or Non-Compete Agreements, and any other document you need an employee to review or sign should be sent before the first day of work. Get these things out of the way so that an employee can avoid spending their first day in stacks of paperwork.
The next step is to create a training schedule that will get the employee up to speed. Even if the new hire has previous experience in the position they’ve been hired for, it doesn’t mean that they’ll be able to contribute right away. They’ll need training on your company’s products, the company’s processes, the company’s mission, and the company’s vocabulary. Assume that everything is new for the new hire because it likely is.
Finally, don’t assume that training or onboarding should only last for a week. Visit with the new hire 30 days after they’re hired and see how they’re settling in. Re-train them in critical aspects of their job during the first 90 days of employment. Have their manager meet with them regularly and ensure they’re understanding expectations. It’s incredibly expensive to replace someone, so it’s best to invest the time and energy to keep them. Much of this investment should be in the first three months of employment.
3. Prioritize Workplace Safety
Although workplace safety has always been important, there is definitely a renewed focus on this critical HR practice. While some people have only ever thought about workplace safety in terms of factory work or being careful with heavy machinery, this is not the case.
The COVID-19 pandemic has forced all workplaces, regardless of industry or activity, to place a greater emphasis on the safety of their employees. If employees cannot come to work and feel like they’re safe and cared for, they may just stop coming to work.
So what does this look like in practice? Here are a few things to consider when working to make a safe environment for employees:
- Place hand sanitizing stations throughout your office in order to give everyone easy access to clean their hands.
- Regularly spray desks and computer monitors with disinfectant.
- Limit the number of people who can sit together inside a conference room.
- Spread out employee desks so they are socially distanced.
- Purchase plexiglass barriers to place in between cubicles.
- Circulate air regularly
- Purchase air purification systems
- Do not allow visitors in the office
- Require that masks be worn in the office
- Limit access to shared spaces or common areas like the break room or kitchen
Of course, the above suggestions are related to precautions in association with COVID-19. If your office has other safety measures that need to be enforced due to the nature of the work, (like in a factory or warehouse setting) then ensure those safety guidelines are established and followed.
4. Create Open Communication Channels
Whether your employees are working from home, working in the office, or doing a combination of the two, creating open communication channels is an essential HR best practice. It is important for employees to feel like they can be heard. If their voice isn’t valued, then it’ll be hard to find the motivation to work hard.
The pandemic has changed a lot about the ways employees communicate, and we expect many of those changes to remain. Chat tools such as Slack or Microsoft Team, project management tools like Asana or ClickUp, and video conferencing tools like Zoom and Google Meet are all very common in many offices and organizations around the globe.
As an HR department, part of your job will be to ensure that communication is consistent across the entire organization. Make sure employees are comfortable using the tools they’ve been assigned to communicate with and make sure everyone in the organization has a way to get in touch with anyone else.
Another thing you might consider is providing opportunities for employees to speak directly to company leadership. Of course, every employee should have a manager that they meet with regularly, and this manager can pass on information to higher-ups in the organization when appropriate. In addition to this, some companies have open discussions or forums with company leaders on a monthly or quarterly basis to allow employees to ask questions or give input on the direction of the company. These types of conversations help employees to feel more included and more involved.
Check out our latest article on the 20 best software tools for any small business.
5. Compensate Employees Fairly
In many surveys conducted across hundreds or even thousands of employees, the most important thing to employees is fair pay. When employees feel like they are being compensated fairly, they spend a lot less time worrying about why they’re not making more, and a lot more time focused on projects and efforts that move the company forward.
So how can you know that your employees are making a fair wage? A good way to do this is to compare their salaries and compensation packages against the market in your local area. Obviously, if your business is operating in rural Nebraska, you don’t need to compensate employees as if you were headquartered in San Francisco. Location matters when it comes to compensation.
Services such as Glassdoor and Payscale are easy, convenient ways to get compensation data for different job titles. You can see the range of compensation being paid for positions with those job titles, and you can ensure that the salaries you are paying fall within the range. Of course, it’s always a good idea to pay at the high end of the range when you can afford it. When an employee is well-paid they feel valued and care for. This will likely lead to them staying in your company for a longer period of time.
In addition to salaries, you should also consider if and how your company pays out bonuses. Bonuses are a great way to incentivize employees and can be a welcome surprise for some of your top performers. Consider creating a bonus structure that aligns the goals of the business with the performance of employees.
6. Manage Employee Performance
Just as it is HR’s goal to hire great people, it’s also important that you manage and track the performance of your employees. This allows great employees to be rewarded for their efforts, get promoted, earn raises, and take on more responsibility while helping to identify employees who are not performing well.
Contrary to common belief, employees actually like to have their performance evaluated. They prefer to know where they stand and they want feedback on their work. In the mind of an employee, there are few things worse than being fired for doing a poor job when you never had the chance to make changes or correct behavior.
Employee performance management typically starts at the managerial level. Managers should meet with employees for one-on-one meetings and performance reviews regularly. If your company only reviews performance on a bi-annual or annual basis, you are doing your employees a disservice. These kinds of reviews should be happening monthly (or quarterly at the very least).
Regular performance management benefits everyone. The employee has a better idea of where they stand and what is expected of them, and company leaders begin to learn which areas of business are strong and which areas they need to improve. Having everyone on the same page, working towards goals together, and getting feedback along the way are all part of this HR best practice.
7. Offer Quality Employee Benefits
We previously mentioned the importance of paying employees a fair wage, and this idea of offering quality employee benefits builds on that practice. Employee benefits are part of the employee compensation package. When you offer good benefits, you give employees more reasons to stay and work for your company.
Some benefits should be looked at as required. This includes things like paying state and federal unemployment taxes, complying with workers’ compensation regulations, contributing to state short-term disability programs, and complying with the federal Family and Medical Leave Act. While many of these required benefits will be unseen (and likely unappreciated) by your employees, it’s important that they’re taken care of.
Other benefits, often referred to as fringe benefits, are not required to be offered by law, but are often expected by employees. Without offering some fringe benefits, the chances of recruiting and retaining high performing individuals is very low. We live in a competitive world where many companies offer very exciting benefits packages that include things like unlimited PTO, flexible work hours, paid insurance plans, and 401k matching. Even if your company cannot afford to offer all of these benefits, we encourage you to come up with a plan that will keep you competitive in the talent marketplace.
Benefits that aren’t as costly but may still be attractive to current and future employees include things like paying for streaming services, company mentoring, generous paid parental leave, access to a company Audible account, a pet-friendly workplace, and in-office entertainment (ping-pong tables, X-Box, etc).
8. Reward and Recognize Outstanding Employees
Employees crave recognition and want to be rewarded for their good work. Although you don’t need to go out of your way to praise every employee for everything little thing they accomplish, it doesn’t hurt to make a big deal of an employee who really made a difference.
There are many ways you can go about rewarding and recognizing outstanding employees. Here are a few suggestions you might consider:
- Create an “Employee of the Month” award
- Provide special company swag
- Set up a dinner with the CEO
- Send a surprise package to their home address
- Pay for an experience they can enjoy with friends or family
- Buy them a new office chair
- Give them a gift card to their favorite store or restaurant
- Allow them to attend a conference of their choice
- Make a charitable donation on their behalf
The key here is to be consistent. Come up with a pattern where you can regularly recognize great work without seeming bias or unfair. Developing habits of regular recognition will give employees something to strive for.
9. Create Flexible Work Opportunities
Work has changed, and in the minds of many, it has changed permanently. The way we work, the hours we work, and where we work are all up for debate. We believe that 2021 will bring a new world of employee expectations that employers need to be prepared for. Going forward, offering flexible work opportunities will be a core HR best practice for businesses everywhere.
The COVID-19 pandemic has taken the lid off of the remote work discussion. Hundreds of thousands of companies were forced to quickly shift from in-office work to remote work in March of 2020. Some of these companies have returned to the office while many continue to work from home.
Now that employees have experienced what it’s like to work from home, many of them will be anxious to continue that arrangement. Others may have found that they dislike working remotely and they want to return to the office. It’s important that your company is flexible enough to have policies in place that allow for both kinds of work. Taking a hard stance one way or another will alienate some employees who will likely leave you for a more flexible situation.
Eddy makes it easy to manage employees from home or in the office.
10. Use Cloud-Based HR Software
The responsibilities of the HR department are broadening. They are also growing in complexity and in the level of compliance. Hiring a large HR staff will not always be an option, and even for companies that have the luxury of hiring multiple HR professionals, it’s tricky to keep everyone on the same page without the use of HR software.
The HR software industry has matured significantly over the last few years. Millions of dollars have been poured into software products that can now do everything from hiring, onboarding, PTO management, time-tracking, payroll, and so much more. These tools have proven to make HR departments more efficient and effective.
The world has changed and HR, like many business practices, has gone digital. The advantages of good, cloud-based HR software are undeniable, making it an easy inclusion to the list of HR best practices in 2021. Not having an HR software tool means inefficient processes, unsecured data storage, manual work that leads to human error, and a whole barrage of questions that employees could answer themselves if only given the proper tools.
11. Practice Fair Termination Policies
Like hiring, firing is a critical process that takes a lot of time and effort to get right. There is definitely a “right way” and a “wrong way” to go about terminating an employee. Of course, you’ll want to get this right. Getting it wrong will affect your reputation in more ways than one. If your termination practices are not fair, current employees will get suspicious and will always live in fear of being fired. Future employees might see reviews on Indeed or Glassdoor of a disgruntled former employee sharing their experience of how they were terminated unfairly. You don’t want to risk such negative exposure.
When it comes to termination, the most important thing to remember is to give an employee a chance to change their behavior. Beyond extreme examples where termination is required immediately, most employees should be given the opportunity to turn things around. This starts with a consistent evaluation of employee performance. If an employee’s performance is lacking and you’re considering terminating their employment, don’t hesitate to vocalize this.
The employee would prefer to know that you’re considering their termination than to be kept in the dark about the process. By vocalizing your concerns, you can work with the employee to come up with a performance improvement plan. You can agree with the employee about expectations moving forward and then you can monitor performance to see if those expectations are met. If the employee is unable to live up to expectations they will know that they’ll be let go, but they won’t feel caught off guard. They’ll understand that they were given a fair chance to improve their performance, and they’ll appreciate the transparency and honesty.
Creating a fair, transparent termination process is a fundamental best practice that should be reviewed and considered in every company.
In many ways, 2021 will be no different than any other year. HR will still need to focus on hiring the best people, training them well, managing their performance, compensating them fairly in terms of salary and benefits, and creating solid processes for recognition and termination.
In other ways, 2021 will absolutely be different than any other year. HR departments need to face the new reality of working conditions that may or may not be affected by a lethal virus. Workplace safety will rise to the top of the priority list as companies try to create a safe environment for their employees. Companies must also reckon with the flexibility employees now crave. Creating opportunities to work in the office or from home will give the employees the choice they’re looking for.
These 11 HR best practices are designed to help give you ideas and insights to make your workplace the very best it can be in 2021.