HR Guide for Small Businesses: The Ultimate Guide

HR Guide for Small Businesses: The Ultimate Guide

Your employees are the most valuable assets that your business has.

Given how important your employees are, you and every business in Singapore must have an effective human resources (HR) strategy to improve your company’s talent and effectively grow your business.

In this guide, we’ll help you create this strategy. We’ll talk about best practices for HR, payroll, automating HR tasks, hiring and training new staff, and other useful tips.

Hiring and Training New Staff

Finding the right people to hire is arguably one of the most difficult tasks that you’ll face as a business owner. Research even shows that if you get this wrong, it can be a very expensive mistake. A survey from CareerBuilder found that the average cost of a bad hire is over S$23,000 annually due to lost productivity, time, and the cost of hiring and training a replacement.

So how do you know if someone is a good fit for your company? While there’s no one-size-fits-all answer to that question, here are two useful guidelines to help you make the right decision.

First, focus on hiring people that fit your company’s culture and values, and, in particular, are aligned with your long-term goals. These employees will be the most engaged and passionate about working for you and achieving the company’s mission.

Second, it’s generally better to hire someone with fewer skillsets but who has a growth mindset and is receptive to coaching and training instead of someone who is very talented but has a fixed mindset and isn’t receptive to training.

And don’t forget to invest in an effective onboarding process. Similar to when you’re getting to know somebody you’ve only just met, the first few weeks of a new employee’s tenure are crucial in determining how they feel about working for you, which can in hand, can play a part in influencing their motivational levels when producing work for you and your company.

A good onboarding process will leave the new hire energised and passionate to start working for you and clear on how the company works, who to go to if they have questions about various issues, and what they’ll be doing every day. A bad onboarding process, on the other hand, will sour this newly-formed “relationship” and can leave the employee wondering if (s)he might have made the wrong decision to join your firm.

Payroll and Benefits

The payroll cycle in Singapore is generally monthly, which means that wages are paid before the last working day of each month. However, in Singapore it’s standard practice for employers to pay a 13th-month salary at the end of the year.

Collecting accurate data about your employees ensures that both employers and employees pay the right amount in taxes and state contributions and, more importantly, that both parties receive all the benefits and payments that they’re entitled to.

At the time of writing, employers are required to contribute 7.50% to 17.00% of payroll (up to S$6,000 in income) to the Central Provident Fund (CPF) for pensions and up to 0.25% of payroll to the Skills Development Fund (SDF) for the Skills Development Levy (SDL). Employees are required to contribute 20% of their salaries to CPF for pensions.

Employees who are covered by Singapore’s Employment Act and have been at a company for at least three months are entitled to at least 7 days of paid annual leave in their first year,  increasing by one day for each year of employment thereafter. That said, most employers choose to give their employees 14-20 days of paid annual leave after the first year.

Conducting Performance Reviews

Performance reviews are great opportunities to recognise and reward high-performing employees and identify employees that are falling behind. Although it’s up to you as an employer to determine how often and how you conduct performance reviews, we recommend tailoring your approach to fit each individual employee.

The Ministry of Manpower (MOM)

The Ministry of Manpower (MOM) is the government entity responsible for creating and implementing labour policies related to the Singaporean workforce. Their tasks include issuing work permits, managing workplace safety and health regulations, regulating employment practices, and more.

As a result, if you’re thinking of implementing changes to your HR policy, make sure to check with MOM to see if your changes comply with Singapore’s Employment Act and other workforce-related regulations.

Automation and Digital HR Solutions

Roughly 50% of an HR department's time is spent processing employee information and answering queries. Since time is money, businesses are losing a lot of money through such time- and labour-intensive administrative tasks.

One way to fix this is through automation. The advantages of automating HR tasks include, but are not limited to:

  • Save time and money, thus freeing up HR staff to work on higher-value tasks
  • A lower probability of making errors in payroll
  • Allows employees to self-manage their leave through an online web application
  • Helps companies run detailed reports about their employees and analyse business intelligence

When in Doubt, Reach Out!

Connect with Sprout to outsource your HR duties with our Employment Pass application services and our payroll services. We want you to focus on what you do best, while we take care of the rest. If you have further questions, get in touch with us! We’ll respond within 24 hours.