How Small Businesses Can Benefit from Human Resources

[This article was written by Rayanne Morriss.]

Employees are vital to any company. Managing your team members successfully is also vital, even if your business is small. Your business offers a product or service to customers, and your workers are responsible for delivering these services or products to your client base. Employee morale, performance, and commitment to your company can be improved through a quality human resources team.

Rule Adherence

One of the essential functions of a human resources department is making sure the business is following the regulations that affect all employee interactions. This includes administration, hiring, safety, and even termination. Even small businesses, which are classified as a business with one to 14 workers, have to comply with the Equal Pay Act, the Fair Labor Standards Act, and the Immigration Reform and Control Act.

Practical Hiring Methods

A valuable employee is someone who has the knowledge, skills, and abilities that are in keeping with the culture of your company. Human resources management is necessary for small businesses because it helps with the development and execution of systems that reduce the possibility of hiring someone who isn’t right for the company. HR also helps manage the risk of the hiring process. These risks can include inappropriate questions during interviews, reference verification, and discrimination.

Administration of Benefits

Small businesses don’t often offer extensive benefits that are available at larger corporations, but benefits administration is still necessary. The HR department is necessary to research the benefits that can be offered to team members in the most cost-effective manner. The human resources team also works to make sure these benefits are provided to employees in the right way and at the right time. It’s important for small businesses to have a qualified HR department so human resources professionals can learn which benefits team members deem important and work to offer these benefits.

Selecting Qualified Professionals

In many cases, some small business owners treat human resources for private foundations the same way they treat fire or hurricane safety. This means the daily pressures of running a business could cause owners to overlook the basic steps that emphasize compliance. Then, when an issue arises, you may be struggling to find a solution and overlook important daily operations. Research indicates that 54% of small businesses take care of employee situations on their own, without an HR department. And since most CEOs are better equipped to handle other aspects of the business like technology and sales, some human resource matters aren’t properly addressed.


It’s also important to note that many team members who have been assigned to handle HR tasks are not prepared to take on this responsibility. ADP’s Ad Hoc Human Resource Management Study shows that 70% of companies who have 5-49 employees assign HR roles to a member of the team who doesn’t have human resource experience. About 23% of the time, these employees serve as administrators and COO, and 12% of employees assigned to HR work in finance. Paychex also conducted a survey that revealed that under 50% of people who own small businesses were confident in their company’s HR methods.

Employee Training and Development

Making sure team members are properly trained and supported throughout their time at the company is important, no matter the size of the business. It’s crucial for some small companies to cross-train their employees so that team members are comfortable handling several tasks that make the business run smoothly. HR team members can also search for cost-effective options that ensure consistent business operations without negatively impacting the company budget.

Recognition of Employees

Small companies that don’t have big budgets need HR management to implement employee recognition initiatives and events that make team members feel valued. When employees know they are important to an organization, they are more committed to their jobs and are likely to stay with the same company longer. Even simple gestures like an “employee thank you day” can make a huge difference in the way your team members function on the job. HR can also conduct surveys to ask team members about what they value as employees and provide the information to develop programs that meet the needs of everyone connected to the small business.

Final Thoughts

These solutions can improve the way you run your small business and improve the work environment. When your employees feel valued and are committed to giving their best to the company, this can result in long-term success for your company.

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