Why Small Businesses Need HR

Written by: Lorrie Howard, Horizon Point Consulting

TriNet, a California based HR Services provider, conducted a survey of small businesses in 2014. They found that:

  • 81% of small business owners manage the HR function themselves
  • 30% admitted that they were nervous about managing HR for their organization
  • 30% reported that they improperly paid employees
  • 23% acknowledged that they lost employees to their competitors due to benefits

According to the U.S. Census Bureau, there are over 137,000 new employer companies starting up each month. As those companies grow, their burdens as an employer increase. Many of the managers who responded to the TriNet survey stated that they spent approximately three to ten hours per month on processing payroll taxes. That doesn’t even account for all of the other HR responsibilities they manage. The more time they spend managing HR, the less time they have available to focus on growing their organization.

What can small businesses gain by turning their HR functions over to a trained HR professional?

  1. Compliance. An HR professional will evaluate the organization’s HR policies and procedures to ensure that they are compliant, meet best practice standards, and truly work in the best interest of the organization and the employees. By ensuring that the organization is compliant, a small business can help to minimize employment liabilities.
  2. Recruitment. HR can assist the organization with recruitment efforts, streamlining procedures to be more efficient, cost-effective, and to help ensure that the organization is hiring the best candidates for the position and the company culture. They can also assist with how those candidates are integrated into the organization, from onboarding to training, to performance management.
  3. Training. While orienting employees to the organization is one aspect of training that HR often has a huge hand in, training goes well beyond that initial introductory period. HR is often an integral part of designing training programs within an organization. They not only help design training but work to evaluate the effectiveness of the training, as well as determine additional areas of need. They also work closely with management teams to provide invaluable leadership training.
  4. Strategic Planning. The role of HR has evolved immensely over the past few decades. It has moved from an administrative role to a strategic role. In most organizations, both small and large, HR now has a seat at the table. Many organizations look to their HR departments to help strategize and plan for the organization’s future. HR plays an important role in the stability and growth of the organization. Organizations look to HR to fill four vital roles: the administrative expert, the employee champion, the strategic partner, and the change manager.

How can a small business justify the cost and what will be their return on that investment?

By building a strategic partnership with HR, organizations can help to determine how to most effectively use the financial resources allotted towards HR functions including:

  • Wage structure and benefits offered
  • Utilizing cost-effective HR systems
  • Increasing employee morale and retention
  • Safety/Risk Management mitigation

While adding HR to your small business will mean finding the financial resources to do so, the cost of not adding HR to your organization could be much more substantial.

Do the benefits of adding HR to your small business outweigh the risks?

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