Why HR Matters for Small and Medium Businesses

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By Grace Collins

Small businesses are the backbone of any economy. It rings true particularly here in the U.S., where small- to medium-sized businesses (SMEs) make up 99.9 percent of all businesses. That translates to over 30 million businesses that employ upward of 59 million Americans. A good Human Resources (HR) Department is crucial to every type of business. Yet in today’s current climate of uncertainty and cutbacks, HR has become even more important to SME owners. In this post we will cover why human resources matter greatly to small businesses and should not be part of any cutbacks.

More Than Hiring and Firing

Hiring talent, and firing them when necessary, is one of the primary tasks of HR. However, HR also performs a variety of vital tasks, notably preparing employees' payroll and benefits, initiating performance reviews, disseminating company announcements and policies, creating manuals, and taking care of any onboarding. Just as crucial, HR makes sure that all the above are accomplished in compliance with state and federal laws, in turn keeping the business safe from potential lawsuits. A company that cuts down on HR to cover costs will find themselves struggling to complete these tasks putting not only their hiring process at risk but the entire business operation. In order to avoid this, a small business must see the value in having a strong HR department.

Why HR Matters

Recruitment in the new normal

The success of any business depends on its employees. HR professionals can help attract and secure talent that fits the SME’s needs. This year has demonstrated how companies need to be very efficient with who they hire as an ill-fitted employee could cause a lot more issues than before. One benefit of the shift to operating online across industries is that traditional recruitment is giving way to remote recruiting. The ongoing pandemic has forced companies to reimagine the way they attract, recruit and retain employees. In particular, organizations need to bridge the virtual event recruiting gap through the use of available technology, like video conferencing platforms and artificial intelligence-assisted talent management platforms.

The way to bridge this gap is by employing HR professionals who are knowledgeable about the latest recruitment paradigms and equipped with expertise to adapt to the changing norms. The good news is that while remote hiring may be a new process to many companies, those who are now studying HR management at degree level will already be familiar with remote work due to the increasing number of students taking online degrees in the field. Graduates with an online human resources degree will have covered the latest emerging technologies, current issues and trends in HR. They will be able to apply them to the current situation. SME leaders who may have valued traditional qualifications over modern methods, like online learning, should now see that not only are the two equals, but those studying online may even have an advantage when it comes to remote recruiting. This is particularly crucial to SMEs, who will need to cast a wide a net as possible to bring in top talent in order to survive the coming years.

Employee Training, Development and Recognition

Finding and hiring top talent is one thing. Keeping them is another. HR helps in this regard by taking point in keeping employees engaged. Central to this is constant training and development, which will benefit SMEs greatly when done correctly. HR, for instance, can organize no-cost or low-cost training programs that will improve employees' skills, or they can even cross-train employees, in turn preparing them to take on multiple functions or tasks.

HR also makes sure that employees get compensation, benefits, and recognition. This can include aiding with a retirement plan or opening a 401(k), running a bonus system, and coming up with recognition programs and activities that will make employees feel valued. A company that is on top of this will improve employee engagement, empowerment and retention.

Legal Safety Net

Save for retaining an actual lawyer, HR can help protect SMEs for possibly crippling lawsuits stemming from unjust labor practices, illegal firings and similar cases. That's because HR professionals are well-versed in employment laws, which vary from state to state. This knowledge will help SME owners avoid mistakes that could have serious legal consequences. HR can ensure full compliance to state and federal laws, from displaying FMLA and OSHA notices and posters in the workplace, to keeping the business from potential fines and other penalties.

Ostensibly, quite a few SME owners think that having HR is an unnecessary expense, especially with a limited workforce. This couldn't be farther from the truth. Yes, it is an additional expense, but it is also essential that SMEs have a good HR department if they want to continue growing.

Grace Collins is a business and financial blogger. She provided this content exclusively to ALTA. Send feedback to communications@alta.org.