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15 Common HR Terms Every Small Business Owner Should Know

15 HR Terms Every Small Business Owner Should Know

Reading Time: 4 minutes

Our grandmothers used to say we should never pick fights with our doctor and a hairdresser. For a modern business owner goes the same, just with the small addition: Never pick a fight with your hairdresser, doctor, payroll and HR. Priorities first!

Good HR is in the core of every successful business. Besides managing and developing a company’s culture, HR managers play a key role in recruiting new hires, managing benefits and payroll, take part in the employee’s training process and mediate conflicts within the company.

Great HR managers work closely with CEO’s to improve what’s lacking and achieve business goals effortlessly. That’s why every CEO should be involved in HR processes and know the most important HR terms to avoid making basic (yet sometimes fatal) mistakes.

1 Absence Management 

Absence management refers to tracking employee’s leave, whether it’s due to injury, sickness or use of vacation days.

HR managers have to make sure everything runs perfectly while the employee is absent from work. It has to enable every employee to use available days off to avoid burnout and ensure they’re productive and engaged. That’s why employee leave tracking is one of the most important tasks HR has to do. It’s often complicated and time-consuming and that’s why many HR managers dread of doing it.

However, there are many vacation tracking software in the market that ease up this process and one of them is Vacation Tracker. It offers a whole bunch of options for tracking employee leave ranging from a sick day, jury duty, paternal leave, etc. With Vacation Tracker sending and approving leave requests is a matter of seconds and that’s why many companies chose to use it as prefered leave tracking software.

Yet another amazing perk Vacation Tracker is offering is 14-days free trial offer so companies don’t have to pay anything before they try it out. 

2 Absenteeism Policy

Absenteeism policy is a set of guidelines and procedures company sets to reduce the number of day’s employee’s miss. Fewer days at work mean decreased productivity and profit and that’s where absenteeism policy comes in to fix the situation.


3 At-will employment

At-will employment refers mostly to the United States. It is a contractual relationship in which employees can be fired for any reason besides illegal ones and without warning. At-will employee has the opportunity to leave the employer without previous notice at any time. Basically, this type of contract prevents an employee from claiming for loss due to dismissal. It can be tricky though both for employer and employee to engage in this type of contract because it prevents the employer to find a replacement on time which consequently harms the company’s budget. On the other hand, an employee is completely left at employers will.

4 Background check

 A background check is some kind of investigation of a potential hire. Usually, companies are checking previous employment status, education, and criminal records. However, background checks can also include credit checks as well. Some companies will even go that far and check candidate’s social media accounts to assess how well a candidate will fit the team or look for some suspicious activity,

 5 Benefits

If they want to attract the best talent companies, by default, have to offer some benefits to their employees. They come in all shapes and sizes and they are some sort of “bonuses” employee gets in addition to a monthly salary. Some examples of benefits employees can get are private health insurance, pension plans, an additional number of vacation days, etc.

6 Boomerang employees

Boomerang employee is the one who worked in the company, decided to quit and then returned after some time. Some statistics say that around 15 percent of employees are considered to be boomerang employees. Additionally, 40 percent of employees say they would return to the previous employer.

7 Compensatory time off

Compensatory time off or comp time is a way of paying employees for their overtime work. Companies who have this policy are choosing to pay their employees in the form of paid time off. To make it simple, an employee earns paid time off instead of additional pay.

 8 Employee onboarding

The employee onboarding process is extremely important for the success of every business. That’s why we think it’s one of the HR terms you shouldn’t forget if you’re a business owner. If done correctly, it can reduce employee retention and save the company’s budget. This process refers to a set of actions which help new employees transition into the new company and involves everything from filling out paperwork to meeting co-workers. 

9 Employee Empowerment

Opposite to micromanagement, employee empowerment emphasizes the importance of allowing employees to make independent decisions.

10 Exempt (and non-exempt) employees

An exempt employee is one who is excluded from minimum wage, overtime regulations and other protections. 

11 Performance review              

A performance review is one of the most important HR terms if you want to boost employee’s engagement, productivity and retention. Hence, this term is referring to the evaluation of an employee’s job performance (whether it’s on a monthly or a yearly basis). 

12 Minimum wages

Minimum wage is among the most used HR terms. It refers to a minimum amount of money employees can earn throughout the month. Minimum wages vary from state to state and it’s important to keep up with the law to avoid any legal issues.

13 Non-compete agreement

Among the most used HR terms in the marketing industry is a non-compete agreement. It stands for a contract between employer and employee which prevents an employee to enter into competition with the employer right after leaving the company.

14 Full-time and part-time employees

Sadly, many people don’t know the exact difference between full-time and part-time employees. If you’re still unsure about it then this is among the HR terms you should learn once and for all. 

To summarize, the difference between full-time and part-time employees is in the number of hours they work during the week. A full-time employee works for at least 30 hours a week. On the other side, part-time employees work less than those hours to qualify

15 Fringe benefits

Fringe benefits are an addition to an employee’s normal salary. Some examples of fringe benefits are health insurance, workers’ compensation, retirement plans, and medical leave. Less common fringe benefits might include paid vacation, meal subsidization, commuter benefits, etc.