Policies and Procedures for HR (Human Resources) issues are critical. Without them you will get into trouble. Most small businesses work on the “We’re all friends” basis of personal interaction. That seldom works long-term even between two individuals, let along a growing company. At a minimum, you should consult an HR professional with expertise in your jurisdiction, and ask what are the critical essentials.
How do you interview prospective employees? Which questions may you ask, and which will open you to a discrimination suit? How and how often do you review performance? Is your promotion process fair and transparent? What do you do with under-performing individuals? How do you deal with workplace harassment or illegal activities? How do you terminate an employee’s employment? What termination packages will reduce the probability of subsequent problems? What policies will make your business an attractive target for talented employees?
Related to HR policies are policies and procedures related to workplace safety. Your local jurisdiction’s legal requirements are only a minimum. Meeting the mere minimum does not contribute to acquiring and retaining top talent. Top talent want more, and are prepared to look elsewhere. Even if they work for you, they will not produce their best work if they are sitting in an uncomfortable chair with a draft or a noisy fan. Keeping employees happy and productive is much cheaper than dealing with high turn-over.
All it takes is one disgruntled employee or recent employee to turn your successful, growing business into an expensive legal quagmire. CYA: get this one right, right at the start!