EP 121: The 13 HR Systems Every Small Business Needs - Start Here | HR Systems Series Ep. 1
This is the series launch. Over the next several months on Don't Waste the Chaos, I'm walking through 13 HR systems every small business owner, operator, and office manager needs in place - starting with the foundation: what you're actually responsible for the moment you hire your first person.
If you've ever told yourself "we don't have HR," this episode is for you.
Listen now
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In this episode
Why HR isn't a department — it's a responsibility
The four buckets of HR (foundational, operational, strategic, infrastructure)
The six employer responsibility categories every small business needs to audit
Why 70% of employers who experience an employee-centric lawsuit never financially recover
What pay inequity, misclassification, and ignored performance issues are actually costing you
How to use this series — and why pulling the transcript into AI with your state, headcount, and industry will make it 10x more useful
Free resources mentioned
Employer Responsibility Checklist → saltandlightadvisors.com/employerresponsibilitychecklist
Free Mini HR Audit → saltandlightadvisors.com/hraudit
HR Foundations course → saltandlightadvisors.com/hrfoundations
The HR Easy Button book → available on Amazon and on my site
Transcript
Most small businesses feel like HR is something they'll get into later. They're going to deal with it later — and then later comes and it looks like a lawsuit, or a resignation, or a conversation they had no idea was coming. Now all of a sudden, here's HR, and we need to deal with it.
That's why I'm launching a new series today, focused on the 13 HR foundations. We're going to dig our way through each one, one by one. So if you listen to this entire series, you're going to have a great understanding of what your HR foundation could and should look like.
But before we get into it, I want to let you know I've got a free resource out there. It's the Employer Responsibility Checklist. We're going to get more into it in this episode, but if you go to saltandlightadvisors.com/employerresponsibilitychecklist you'll be able to find it there. Free resource, you can download it, and that will help you work through this content. Grab it. I'll put it in the show notes as well.
So who is this for? I'm talking to any business owner or operator who is focused on HR themselves, or maybe they have an office manager. They do not have a dedicated HR team in general. Or maybe you're a green HR person and you're just trying to learn a little bit more HR. This is going to be really helpful for you.
The beginning of what I'm talking about — these first four episodes in this series — all of these are covered in my book, The HR Easy Button. You can pick it up on my website or you can go to Amazon. I've got Kindle, paperback, and hardcover. I have poured my heart and soul into it, and I've got two more books that I've already written that I'm going to be putting into publishing.
Here's what we're getting into today: HR is not a department. It's a responsibility.
So many people tell me, "We don't have HR." And I'm like, okay, you don't have an HR department. I get that. But you do have HR. The moment you hired your first person, you took on obligations that most business owners don't even really know exist. That's not a criticism — but nobody is handing you the manual. This is exactly why I wrote my book. This is exactly why I started my business. And that's why I'm doing this series too.
I did a speaking engagement last week down in Southern Missouri to a group of HR pros. I was talking about getting away from firefighting and getting to strategic HR. It just reminded me — even a group of HR leaders really need to get into these basics, the operational basics of HR. The t-shirts and the happy hours, they come later. You have to have the foundations built first.
I was at an organization one time that gave away so much swag and did so many parties. And you know what? People would come to me — I was the HR director at the time — and they would say, "I just want to get freaking paid. You can save all your t-shirts." And if they average $15 a t-shirt and you can get two t-shirts a month, do the math — just give me that money in a bonus. That's when I knew we had a major cultural issue.
If you're not ready to get the book and you're not ready for consulting, but you want a little bit more than a free checklist, I do have an online course called HR Foundations. I'm going to have three different courses; the first one covers these basics: employer responsibility, the baseline of an HR audit, hiring, onboarding, a little bit of law. You can find that at saltandlightadvisors.com/hrfoundations. It's under 400 bucks, four modules, and downloadable tools and resources that go along with all of them. I'm telling you, it's good.
The four buckets of HR
When I think of HR, there are four different buckets. Most generally people are going to say things like culture and training. No, that ain't it — that's not the way I see it after doing this for 20 years. I look at it from an operational lens because this is really how we move the needle. So I'm going to walk through my way of HR. You do your way of HR, but this is my perspective.
Bucket #1 — Foundational systems. That's what we're launching into today. Your employer responsibilities, your overall layout of your HR function, hiring, onboarding, policies, and compliance. This is where I start every engagement. If somebody's working with me and partnering with me, I start every engagement right here. If the foundation isn't solid, nothing built on top of it is going to hold. We can put the fanciest HR payroll technology in place and it's just going to be like putting lipstick on a pig.
A lot of people have these thrown together. They exist, but they're thrown together. So they get stuck in the operational systems, which are next.
Bucket #2 — Operational systems. This is where I see most HR people, office managers, or small business owners spend their life. Because they didn't build out the standard operating procedures or the processes for the foundational systems, what we do is get stuck here. This is compensation. This is classification — exempt, non-exempt, W-2, 1099. This is leave management — there's a ton of different types of leave, state versus federal, plus your benefits-type of leave. Performance and feedback. Discipline and documentation. That's where we usually end up spending all of our time. This is where we put out a lot of our fires. This is where we live.
Once we get the foundation built, we can move to the third piece.
Bucket #3 — Strategic systems. This is where we really want and need to live. This is where we start making a huge impact on the business. However, we can't start there or it feels like things are falling on deaf ears. These are things like workforce planning, leadership development, culture and engagement, and HR metrics — which we should all be measuring.
Let me throw this out as a little fun preview for metrics, because most people are going to be like, "I could give a crap about an HR metric." Okay — how many people left you in the last year? Did they leave you in day zero to 30? 30 to 90? 90-plus? Six months plus? Was there a particular manager, team lead, or supervisor that they were leaving? That data tells a story.
If you're not capturing it, you probably have something anecdotal. People tell me all the time, "We don't have a lot of turnover, just maybe one or two people a year." Okay — well over the last three years, if you average two people a year, when do they leave? Because I can figure out: is it a hiring issue? An onboarding issue? A manager issue? I can give you a ton of ideas around where to address the problems if we know the data. That's a soapbox I could just preach on.
Most small businesses never get there. They never get to that strategic piece because they get caught up in the operational piece.
Bucket #4 — Infrastructure. This is kind of an overarching one, in my opinion. It's your HR systems, your HR payroll technology, your tools, your workflows — the tech and the systems that hold everything else together. I'm putting that at the end of the series, but it is important. And it is generally one of the first things that comes up when I'm talking to a prospective client or doing an HR audit: what's your HR payroll technology? Okay, it's pieced together. Or, "We are paying a bucket load for a Paycor, Paycom, ADP, what have you, but we're not using half the modules." Such a common story. The tech vendors even know that's a common story.
There are companies that are getting better at it, though. There are companies that price in a more affordable way for what you're actually going to use. I'll throw out a couple: Gusto is a basic plan, solid, a good place to start if you're not wanting to pay out of QuickBooks anymore in your small business. Rippling is up and coming and I've got a new partnership with them — they look at things in a different way and I love that. One of the longest-standing partnerships I've ever had is with an organization that is essentially the front for Kronos / UKG. It's a big tool, kind of like an ADP, and the company I partner with has a team that actually works with you instead of putting you on a hotline or sending you to online courses. That's a differentiator. So you can have the coolest tool, but having an organization that actually helps you build it is what makes the difference.
So — those are our four buckets. Foundational systems. Operational systems. Strategic systems. Infrastructure. That's what we're going to be getting into over the next 13 weeks-ish. I say "ish" because I'm also going to be sprinkling in interviews with small business owners across the rest of the year — every three to five episodes I'll have a guest on, and we'll talk about their HR and their industry.
Your responsibility as an employer
Let's jump into the HR mindset and namely your responsibility as an employer. So many employers I talk to, so many clients I run across, take an ignorance approach. I don't mean that in a derogatory way — it's kind of, "Well, I just don't know this stuff." And it's like, yeah, well, if you get sued or the Department of Labor does an audit and you've misclassified everyone, you not knowing it isn't going to be enough to save you from a fine and back pay. That's a bummer. I get it — you can't know everything. But you are starting a business, so you are responsible. When you hire your first employee, it's time to get on the train.
Before we can build any of the systems, we've got to start here: what does it mean to be an employer? Not just a business owner that has people, but an actual employer. Most employers would like to be an employer of choice and a place where people enjoy working. But a lot of times as a small business, we start things out chaotic. Who hasn't? I started my business out chaotic too. But if you don't start to put some methods to the madness, all you have is madness. Sometimes you're fortunate enough to make some money off the madness — but why live in an internal state of stress? At some point, let's address these things.
Let me walk through the six employer responsibility categories I cover in the checklist:
1. Compliance and legal. You might be out of compliance today. Most small businesses are, and you don't even really know where. A couple of things I regularly see: people in your organization don't have clear job descriptions, therefore they don't understand what success looks like in their role. They don't know how they're being measured or how they're performing. You may be paying them on a salary just because it's easier and that person liked being paid on a salary W-2, but they may be an hourly employee based off what the Department of Labor says and the Fair Labor Standards Act.
I haven't seen — whether it's an employer I worked inside of or a client I've worked with — I haven't seen one that has everyone classified correctly. And I'm not saying that because it's impossible. It's just that we take the easier way out, or we let the employee have a preference. "Oh, you want to be 1099? Okay." "Oh, you want to be W-2 but you don't like having to clock in and out? Okay." That's just not how we classify.
When it comes to compliance and legal: did we get their I-9 verified from the very beginning? Two forms of ID, or a passport — driver's license, Social Security card, or the passport. Did we take a look at that within their first three days of employment? Because that's what the law says. If they don't do it in their first three days, then they're sent on unpaid leave until they submit that paperwork. Legally we cannot employ anyone whose I-9 we haven't verified.
Just that right there — there's a bunch of little things that are actually pretty big things that could get your business shut down. I said in a previous episode that 70% of employers who experience an employee-centric lawsuit never recover financially. I'm not saying that to scare you. I'm saying this stuff's a big deal. It's expensive. Trying our best and leading with our heart gets us a really long way in life. But if you encounter a lawsuit based off not complying with HR law, trying our best and leading with heart unfortunately doesn't get it done.
2. People leadership. Your team is watching how you treat people more than they're listening to what you say about the culture. Your people are watching how you operate, not what you say. So how are you actually operating? Are you being proactive? Are you being professional? Are you living to the values of your organization that you want other people to live to?
3. Hiring and onboarding. A bad first 30 days undoes pretty much every good hiring decision you've made. Sorry to be the bearer of bad news, but that's the reality. So being systematic on our hiring process matters.
One of the things I said the other day to a client was, "You might have what feels to you like a solid interview process, and you've had pretty good luck with it. But if you aren't asking the exact same questions every single time, you're not running a real process." Let's say you're hiring for the same role and you're not asking the exact same questions every single time. I might be charming in person and easy to talk to, which means I can turn it on and turn it off. But maybe another person is not as communicative or expressive or doesn't connect as well one-on-one. I might get hired for the job even though that person can blow me out of the water from a skills and expertise perspective.
You might say, "Well, I like to hire people that I actually like, that I actually want to work with." Okay, so we just want to have a fun place — but we don't necessarily want to make money. I don't think that's the case. We really want to find people who can hit those skills and abilities, and then make sure that we like them. Instead of making sure we like them and then hoping they can hit the skills and abilities. We hire them because we like them, we don't have a good onboarding and training program in place, they're not meeting expectations — but gosh dang, they are fun to have around. In a year from now, is it going to feel very fun if you're not profitable?
If you haven't listened to my previous episode on onboarding, highly recommend you go back and give that a listen. I walk through what onboarding actually looks like.
4. Compensation and benefits. Pay inequity doesn't stay hidden. Someone always talks. Just having an intentional structure in place is what I'm asking for — and what your employees are asking for, and what your potential new hires are asking for.
Let's say we've got six people, they all do essentially the same job. We benchmark them and we see that two of them are paid at the bottom of the range, one's paid at the 75th, one's paid at the 90th, and one's actually below the range. If we took a look at their experience and their education, where should they actually fall? And then if you say, "Well, those are lower because they're not performing" — let me hear what the disciplinary action process has been looking like. Let me hear what you wrote in the performance review this year. Because I hope that conversation's happening.
If we've got them underpaid and we say it's because of performance — let's hear about it. And be careful if it happens to be those three people on the lower end are all females, or all Black, or all Muslim. Now you've got a sticky situation on your hands, friends, because that's probably looking pretty discriminatory if you don't have any documentation. And it could be discriminatory on accident. But not being systematic, not being strategic in your approach about compensation and benefits — dangerous.
5. Performance and development. The longer you take to address performance, the harder it is to address performance, and the more it's costing you financially and personally. We sit back and we hope it gets better. Or we get busy and we don't address it. Or they get better for a minute and then they're not. Or they have tough stuff going on, so we don't want to address it.
How we're addressing or not addressing performance is huge. Your top performers are watching you not address performance with your underperformers. You might think, "Well, it doesn't negatively impact my top performers." That's just so live from the pit of hell. That's just not true. That's something we tell ourselves to feel better. We have to address performance because our top performers — we might be paying them great, we might be giving them great perks — but they watch you tolerate this underperformance, and they judge. And they should. What kind of leader are you? Are you soft? Do you care about performance? You might be recognizing them well, but if you're not dealing with underperformance, your top performers still care. I promise.
6. Excessive transitions. Terminations, demotions, promotions — all of those areas. How are you handling them? What does documentation look like? How you let someone go tells your team a whole lot about who you are as an employer. Doing that with grace and integrity, but also doing it swiftly and with intentionality, is more impactful than any value statement we'll ever have on the wall. That's for dang sure.
All of this is in the responsibility checklist. I'll link it in the show notes — saltandlightadvisors.com/employerresponsibilitychecklist. It's a lot more in-depth and more pointed with the questions, but those are the topics we cover inside of it. Just giving you some things to think about inside of your business, so you can know: what am I doing by design, what am I doing by default, and where do I need to start addressing things?
You don't need permission
Your HR doesn't become strategic when somebody finally hands you permission. No one needs to hand you permission. There have been multiple times where I've sat down with a CEO and said, "Why aren't you handling disrespect? Why are you tolerating this lack of performance?" I just can't convince myself that it's because you're a sweet person. CEOs are bosses. We get into business because we're gritty and we're tough. We don't usually get into business because it's easy and we're soft. It's a hustle to start a business. So if you tell me you're not handling performance and you're not paying attention to the foundation of your business because you care so much — that is just contradictory.
You don't need permission to go into this. You don't need an HR degree. I don't have an HR degree. My bachelor's is in business and I've got an MBA. But what I've got is 20 years of street cred in HR. I've seen this done poorly time and time again. The person it impacts the most is you. It makes your life harder. It makes it harder for you to recruit. It makes it harder for you to retain. And it makes it harder for you to sleep at night, honestly.
It starts with knowing what you're responsible for, and then what to do about it. So many of us know — we just innately know in the back of our mind — there are things we are not addressing. But what are those things? I've had people come to me and say, "I know I probably need to work with you. I just don't even know for what." And I'm like, that is perfect. That's why we get into the HR audit. I will lift that hood up and take a look under there into these 13 areas. It's not that hard for me to go through, and don't feel bad if the answer is, "I don't even know if we do this," or "We do it, but not well," or "We don't have documentation," or "We did it one time and we've got a policy somewhere — I don't know where it's at — we haven't updated it since 2017." I hear all those things all the time. I am not going to judge you. I am going to support you, and we're going to get through it.
I don't name my business Salt & Light by accident. Salt is wisdom, understanding, and knowledge — so we're going to have to state reality. Light is hope, encouragement, a path forward. This is all figure-out-able. If you haven't listened to Marie Forleo, it's all figure-out-able. We can get in there and we can make an impact, and it's going to make your life easier. Honestly, it's going to start giving you confidence as a business owner — "Dang, I invested in this because this business matters to me, and I'm making an impact, and I am going to have an easier time holding my employees accountable if they are showing up weak because I am bringing it now." It's really going to empower you as a business owner, as a leader. It's exciting.
Grab that free Employer Responsibility Checklist, or you can do my Mini HR Audit — also free — at saltandlightadvisors.com/hraudit. If you want to go through the HR Foundations course, that's saltandlightadvisors.com/hrfoundations. Great place to start.
Next episode, we're going deeper on System 1. We're getting into hiring. We're talking about how to build a process that brings in aligned people. I'm really excited.
If this gave you a clear picture of what you're building or what you need to build — subscribe. I'd love it if you'd share it with a colleague or a peer in your industry. I'm here to help and support you. I'd also love it if you'd reach out — you can email us at hi@saltandlightadvisors.com. I would love it if you'd subscribe to the YouTube channel, Apple, Spotify, wherever you're grabbing this. And if you're just listening — give it a watch sometime. See my face. I've got a new podcast studio set up and I'm loving this new space. Gosh, it's been a lesson in resiliency getting all of this set up.
Which of the 13 systems is going to feel most urgent to you? When I walked through those four buckets, which one is standing out? I would love to hear. Is it the foundational systems — hiring, onboarding, policy, compliance? Is it operational — comp, the nitty-gritty about leave, performance? Is it more on the strategic side — leadership development, workforce planning? Are you doing workforce planning? How do you know when it's time to hire another person? Are you taking a look at others in that role and how much they're producing and what the variance is? That helps you know when you need to hire, and it helps you standardize job descriptions, responsibilities, delineation of duties, and what needs to be delegated. Or are you stuck on HR metrics? Or your infrastructure — the HR payroll tech, your tools, your SOPs, your workflows?
Which area is a hangout for you? I'd love to hear, and I'd also love to hear if there's something I can do for you. You're always welcome to reach out — saltandlightadvisors.com/contact. Please subscribe to the show.
If you are a small business owner listening to this, I'm going to be interviewing small business owners over the rest of the year. Recorded this in April of 2026; it's coming out in May of 2026. For the remainder of the year I'm going to sprinkle in — every three to five episodes — a business owner, and I'm going to talk to them about their HR and their industry.
Here's what I know: everyone wants to tell me their industry is a special unicorn, especially unique when it comes to people. And there is nuance and variance in that. So I'd love to learn more about your industry and share your story. We can even do some live back-and-forth on how to handle some specific situations — what you've learned as a business owner when it comes to the people management side: how to bring them on, how to keep them on, what's hard, when to fire, all of those things. If you're a small or midsize business owner, or you've got one you think I should talk to, I would love to hear from you. Drop me a note so we can get people scheduled.
I know that jumping into HR when you are trying to sell, when you are trying to pay people, when you're trying to make money in your business — I know that can feel like chaos. But this work is worth it. And it'll make your life a little bit easier too.
So don't waste the chaos, friend. Embrace it. Can't wait till next time.
Work with Kerri
Ready to stop firefighting and build the foundation? Book an HR audit at saltandlightadvisors.com/contact — or grab The HR Easy Button to start on your own.
Got a small business owner I should interview for the industry spotlight series? Email hi@saltandlightadvisors.com — I'm booking guests in trades, agriculture, and specialty industries through September.
