The Importance of Human Resources in Small Business

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The importance of human resources management is hotly debated. At best, some naysayers believe that HR procedures and regulations are stiff, unnecessary and unhelpful. At worst, some employees may view HR as a police-like force that is out to jeopardize their jobs or punish them for small infractions. This might seem like the truth for some but only because a lot of small businesses are lacking true HR departments and place the duties on a manager without proper training.

A skilled HR department can be instrumental to the success of a small business. Not only will it help to legally protect a business from various liabilities, but it will help foster a harmonious, efficient workplace environment.

What Does HR Actually Do?

It’s time to stop looking at human resources as a stuffy, overly regulated, unnecessary industry. HR gets a bad rap. The truth is that a good human resources department is actually invaluable to a company. It’s HR's job to help employees do the absolute best job they can do, and doesn’t everyone want that?

HR departments have a lot of different functions. HR employees are skilled at talent management and help throughout the hiring process, including crafting job descriptions, recruiting for job openings and onboarding and training new employees. They also coordinate employee benefits, help manage schedules and handle any issues with employee relations.

In many small businesses with less than 50 employees, HR is a job given to a manager who is already working on something else. Typically, this person works in a financial department since HR managers generally do some budgeting, but having an HR team or just one dedicated HR manager is actually really important. They don’t just help streamline business and employee relations; they help companies comply with the law.

HR Professionals Know the Law

When a small business employs 50 or more people, it becomes subject to a wealth of employment laws. For example, that business is suddenly subject to the Family and Medical Leave Act, which mandates 12 work weeks of unpaid family or medical leave during any 12 month period for eligible employees, but who is eligible? Joe from accounting who got stuck with the HR gig probably isn’t too familiar with employment law, but your business is responsible for following the law regardless of who is running the human resources efforts.

A dedicated HR manager can make sure that your company is following all of its legal obligations, from offering the right benefits to full-time employees to creating competitive employee contracts that don’t leave your company wide open to liabilities. If there’s a lawsuit, you’ll be thanking yourself for having a human resources department.

Human Resources Can Handle Harassment

Harassment is a huge area of risk for a company, and without a dedicated HR manager, a company is wide open to legal repercussions. Ex-employees have won millions in sexual harassment suits or the wrongful termination suits that often come with them, and the average employee or team manager isn’t equipped to handle these kind of disputes. Think of it this way: What do you do if someone is saying they’re sexually harassed, and the star employee, who is the accused harasser, is saying he's not? Who conducts the investigation, and how does this murky situation get resolved?

Human resources managers are trained in this kind of conflict and create a standard set of procedures along with a code of conduct that can be followed in the event that a harassment situation arises (or can prevent that situation from happening in the first place). They’re the ones who can administer a harassment training program and conduct an investigation in the event that someone makes a formal complaint.

HR managers are also supposed to serve as impartial mediators who employees will feel safe turning toward in a situation where, say, their manager’s close friend just happens to be the team member perpetuating bullying or harassment.

It’s a company’s obligation to foster a work environment that isn’t toxic, and HR helps effectively squash any actions that could be damaging or leave the company open to a potential lawsuit.

Employee Conflict and Performance Can Be a Serious Problem

HR departments don’t just deal with harassment; they deal with any and all kinds of conflict among employees. Sometimes, people just don’t get along or have different ideas. Communication is difficult even before power dynamics come into play, but a great HR department can mediate any conflict that may arise.

This also goes for performance-related conflicts. Perhaps an employee is falling behind and not living up to her manager’s expectations. This can create a hostile environment, especially if the manager has to pick up the slack. HR can help analyze where an employee is falling short, develop a strategy to better her performance and conduct regular performance reviews to make sure that employee is not falling behind again.

Talent-Acquisition Stars

Small businesses often have their resources spread very thin, and CEOs wear a ton of different hats. This is exhausting, especially when you’re trying to hire new talent, which is basically a full-time job in itself. Your business is only as strong as its weakest team member, and a great human resources manager will be able to find and attract the most qualified talent along with fostering their success within your company.

Think of all the work that goes into hiring someone for a job opening. You’ll have to create a detailed job description, sift through hundreds of applications, spend hours interviewing potential employees and then know exactly the type of salary that will make your offer competitive without bankrupting your small business. This is a lot.

Even just picking the most efficient benefits package for your business is an undertaking, but an HR person can take this stress off a business owner so the owner can focus on the actual business part of business.

You Won't Lose Productivity When Job Training

Most employees aren’t prepared to just hit the ground running on the first day they start a new job. All businesses have some sort of training required. In some cases, it’s as minimal as setting up an email address and reading through a style guide or code of conduct. In other cases, an employee needs to learn a lot. For example, even the ice cream at Cold Stone Creamery is made a certain way compared to the ice cream at Carvel.

An HR person can take this burden away from the business owner and employees and train new hires. Productivity will not be sacrificed just because someone new is coming on board.

Human Resources Will Do the Firing

If you’re running a small business, there’s a high likelihood that you’re close with all of your employees and team members. How the heck are you supposed to fire someone whose spouse and children you know? How do you fire someone with whom you work every day and actually like? Sometimes, it’s just better to put this job on someone else.

Human Resources departments know how to handle the process of letting an employee go, and surprisingly, there are a lot of laws surrounding this unless you’re in an “employment-at-will” state, which means you can terminate any employee at any time for any reason. Even with that, there are a wealth of laws that protect workers against being fired for reasons like gender and racial discrimination. An HR department can make sure you’re firing ill-performing employees the right way.

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About the Author

Mariel Loveland is a small business owner, content strategist and writer from New Jersey. Throughout her career, she's worked with numerous startups creating content to help small business owners bridge the gap between technology and sales. Her work has been featured in publications like Business Insider and Vice.