By necessity, small businesses maintain minimal staffs, with each employee often performing more than one official duty. This model has both advantages and disadvantages—while costs are lower, employees are often overworked and under-efficient. However, it works fine for some positions in some departments.
To streamline staffing, some small businesses forgo an official human resources department, transferring those duties to the owner or manager of the company. While this approach may help cut costs in the short-term, it could have debilitating results in the long-term. Here are a few reasons why every business, large or small, needs a trained, knowledgeable HR professional.
HR Helps Cut Costs
One of the biggest limitations to small businesses considering hiring an HR professional is the added cost. Salaries and benefits can add up quickly—even if it’s just one person. However, a closer look at the functionalities of the job shows that a dedicated, trained HR employee can actually dramatically reduce costs in other areas of the company.
Here are just few of the ways that HR professionals can use their expertise to help businesses cut costs:
- HR professionals implement safety training and tracking to reduce on-the-job accidents, which can reduce the overall cost of worker’s compensation.
- HR professionals maintain industry, employment and governmental compliance. The world of federal rules and regulations is always getting more complicated, and that opens businesses up to costly lawsuits. HR professionals prevent this by ensuring that companies stay legally compliant.
- HR professionals ensure that employees understand vacation, medical, and benefit policy, eliminating unnecessary absences and increasing overall productivity.
- HR professionals know how to locate, recruit and hire qualified candidates, which reduces the time spent reviewing unqualified resumes and conducting unproductive interviews. This is particularly critical for growing businesses that hire somewhat regularly.
Options for HR Structures
While a full-time HR department may not be financially feasible, there are ways that even the smallest organization can incorporate HR into its staffing structure.
Experts agree that until company reaches 50 employees, it doesn’t need a full HR department. In these cases, the role of HR should be assigned to a single dedicated employee who reports directly to the company president or CEO. Executive assistants, office managers or financial managers can serve in this role, but your best bet is to find a trained HR professional. The employee should be responsible for creating and maintaining employee files, publishing an employee handbook, and posting state and federal notices. Ideally, he or she should also be able to handle recruiting, hiring and onboarding needs.
HR software and technology can greatly assist these HR multi-taskers in streamlining functions. A few examples? Applicant tracking and onboarding software can be implemented to screen potential candidates and execute new hire training, freeing up other staff members to perform core responsibilities. Many HRMS and HRIS systems have online employee portals, allowing individuals to maintain their own benefits enrollment and PTO. Payroll software can be instrumental in automating and streamlining the compensation process. If you’re looking for an HR tool, Glip could be the solution for you.
Outsourcing HR is another option that works well for small businesses. This approach allows each business to decide what HR services it needs and pay an external consulting company to handle them. This is an ideal approach for very small businesses, because they can easily increase the number and scope of services they need as they grow. Functions like payroll and benefits administration can be outsourced for a relatively low cost. Tasks like writing the company handbook or creating training materials can also be easily outsourced to freelance writers or human resources professionals.
Whatever way you look at it, the bottom line is that small businesses do need HR. However, there are multiple options for implementation—whether it’s a dedicated employee, advanced technology, or outsourced services. What advice can you share with small businesses looking to start an HR department?
Originally published Dec 01, 2014, updated Feb 22, 2021