Top Reasons Why Small Businesses Need HR

reasons why small businesses need hr

Every small business owner has likely thought of ways that they can cut business expenses to save money. This topic involves whether you must invest in outsourcing HR or hiring in-house HR professionals.

Some think that HR isn’t really that important if they don’t have many employees, but this is wrong! Every business has to deal with significant HR functions, whether it’s a huge company or a five-person business. If you think HR is only for big businesses, you better think again. HR’s function cultivates plenty of benefits that small business owners often overlook.

Here are things to consider the next time you doubt whether your business needs HR management.

What is HR?

Human resources or in short, HR, is the business side of one of your departments that handles employee resources. This department could be in-house or you can ask service from an HR outsourcing company. Nevertheless, both have the goal of HR to enhance the workplace and the way people operate within it.

Here are the different functions of HR for small business:

  • Hiring and termination
  • Payroll
  • Training
  • Compensation and benefits
  • Performance management
  • Labor and employee relations
  • Organizational development
  • Legal compliance
  • Risk management

Top Reasons Why Small Businesses Need HR

1. Helps in Saving You Time

saves time

Small business employees should adjust to wearing plenty of hats because of the fact that they have a smaller workforce. Including HR functions to your plate will just add strain on your schedule. Assigning HR functions to other personnel can free up time for tasks you highly need to prioritize.

2. Help Create an Employee Handbook

With the help of an HR by your side, you can create an employee handbook which can feature various policies. Having an employee handbook is necessary for any business, to ensure that employees are aware of what is expected of them.

For instance, the handbook may emphasize a sickness policy in detail so employees are aware of what process they need to do if they are sick. There are also other things that need to be included in the handbook, such as, holiday entitlement, filing of leave, a maternity/paternity policy, and anything else that may be of relevance to employees.

3. Staff Reviews and Development Training

staff reviews and development training

There are so many other aspects of the business requiring your attention including staff reviews and development training that could slip your mind as the business owner. It’s important for companies to carry out employee reviews.

The HR can assist with this, and ensure that employees are satisfied with their progress. One of the reasons why some employees leave their company is due to lack of progress and training opportunities. Thus, this is worth the investment if you want to retain good quality employees.

4. Hiring and Firing Process

Hiring a new employee can consume a lot of time that small or big business doesn’t have enough time for. You will need someone who can commit their time to hire and everything that necessitates. This includes sifting through resumes, recruiting, screening applications, setting up interviews, choosing candidates and plenty of other things. Hiring new employees is very important since you want to have the best talent and the best fit the first time around, so you don’t end up wasting resources and time. With that, you need HR.

5. You Need Knowledge About Employment Law

Another crucial reason why you need human resources professional is that they know the ins and outs of employment law. Just one mistake when hiring or terminating a staff member, you can get yourself slapped with a lawsuit. If you are not aware of employment, you are placing yourself, your business, and your reputation at risk.

If you want to avoid lawsuits and internal conflicts, keep an HR professional by your side who is knowledgeable of how to remain in compliance with state and federal laws.

HR professionals know what posters and notices your company need to be displayed. They know what information to post about unemployment insurance, state minimum-wage workers’ comp and more. They know what you need to display and where, and also when you need to update it.

6. Keeping Employee Files

hr - keeping the files

As a reputable business or company, you must not keep just one but three files on each of your employees. You need to have a medical file, unemployment file, and I-9 file for each member of your team.

If you fail to fill out and keep these forms, files and information properly and in the right place, you may be faced with fines up to a few thousand dollars. The HR will know what specific files you need to keep, where they should go, when you need to update them, and also how to keep them organized and easy to access.

7. Establish Right Process

Small businesses have the tendency to fly by the seat of their pants. Sometimes, they force themselves to get things done at the expense of ethics, processes, and norms. This is why it’s important to establish these standards and retain them for a long time. Having an HR team in the company will help put in place these processes and getting a reputation for strong governance.

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