Small business owners often believe they have a pretty good understanding of what makes the human resources (HR) department. Yet, comprehending the entire spectrum of HR is actually one of the most difficult elements of owning or running a small business. HR goes more than making a work schedule and sending payrolls; there are other HR duties that need to be managed, even in small businesses. It should be noted that HR is not a luxury role limited only to medium to big businesses. Despite their size, here is why small businesses need to consider adding HR staff to their team.

Significance of HR in General

HR has a significant impact on the development, reinforcement, and progression of a company’s strategy. When it comes to HR, there are several factors to take into consideration. Training, hiring, and maintaining documentation for employee wages and benefits are just a few of the responsibilities that belong under the HR umbrella—and each is crucial in its own way. This department also oversees salary administration, performance evaluation, professional training and development, employee recruitment and onboarding, as well as reinforcing the company’s values.

Small Businesses in Reality

According to research, 54% of small enterprises either manage employment affairs themselves or delegate HR duties to another employee. Unfortunately, the majority of employees who take on these responsibilities are unprepared to do so, since they were not recruited specifically as HR staff. Unfortunately, this is a common scene for small businesses. ADP’s Ad Hoc Human Resource Management Research noted 70% of enterprises with 5-49 employees add HR to the burden of employees who have little to no expertise with workforce issues. These “ad hoc HR managers” carry out HR duties such as office administrator and operating officer 23% of the time, while 12% work on finance and handle payroll, bills, and arrange corporate travel.

Better Recruitment for Small Businesses

Recruitment is where your branding begins, and HR teams at small businesses generally find themselves struggling to repair a bad image rather than establishing a good one. For example, an unqualified employee that is delegated to screen resumes and conduct interviews may ask insensitive questions to candidates and the news about it spreads fast. This seemingly-simple, yet actually fatal mistake is often overlooked, although it can harm the company’s branding at a larger scale. 

Small business recruitment is a chance to provide a favorable candidate experience, promote a positive and inclusive corporate culture, and establish your reputation as a “dream company to work for” in your industry. This is where HR saves the day. HR professionals should be able to develop a recruitment strategy that reaches the best talent required to accomplish your company’s objectives, sustain a strong hiring flow, and cultivate collaborative relationships. 

Better Compliance

Payroll, paperwork, and benefits are all crucial aspects of human resources. HR departments deal with employee-related issues like benefits, salary, training, and internal conflicts. This applies to compliance as well, because not understanding how to categorize an employee or what your business is legally required to do might come down to how the paperwork is filled out and whether or not it is correct and error-free. You may save up so much time and cost if you know what legal regulations there are for your small business to abide by. This can include minimum wage, maximum working hours, tax responsibility, leave policy, and so on. 

Lower Turnover, Higher Loyalty

Employee engagement is significantly related to employee retention, and one of the most important variables in employee engagement is opportunities for professional growth. While some businesses may believe they lack the resources to adequately train new employees, it is important to understand the impact employee turnover has on a company’s budget. With more people coming and going within a business, especially small ones, the need for cost and time increases. To lower retention, employees need to be promised (and provided) opportunities for career development. As this is not an easy thing to do, HR is mandatory to ensure that this goes well. HR can minimize turnover and enhance retention by doing one thing: providing all employees with learning opportunities and a roadmap to development. Additionally, giving opportunities for career advancement will also enhance morale.

Having HR on your small and growing team should be a matter of ‘when’ and not ‘if’. After all, your small business is just an initial phase before growing bigger and bigger. 

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