Do You Need an HR Department for Your Small Business?

Human resources department is not for medium and large businesses only. It is a quintessential function that brings many benefits that small business owners often overlook. 

What is the Human Resources department? 

Human resources also referred to as HR, is a business department that oversees employee resources. The HR department is usually in-house, but sometimes a business can outsource its HR functions to another specialised agency. 

The primary purpose of a Human Resources department is to enhance the workplace, and the way employees perform within it. The Human Resources department have a lot of functions, which includes: 

• Payroll
• Hiring and termination 
• Compensation and benefits
• Performance management 
• Organisational development
• Labour and employee relations 
• Legal compliance 
• Employee training 
• Risk management 

HR staff can help you to keep your business running smoothly.

Six reasons why the Human Resources department is essential 

1. HR helps in controlling costs

HR can suggest efficient solutions that cut workforce-related costs for the company. An HR team can also establish pay and benefit plans that cut business costs. For instance, HR can assist in negotiating lower rates on an insurance plan. It's a win-win for the employer and employees. 

2. HR enhances hiring and employee retention 

HR can enforce policies that enhance employee satisfaction. When your employees are focused and satisfied, it will improve your recruitment and retention rates. Companies spend a lot of money to hire, so when you hire, you need to make sure the investment will be for the long haul. 

3. The Human Resources department develops the workforce

HR staff know which roles require particular skills. As a resource, HR can develop and offer training programs to help employees improve their skills. When your workforce is highly skilled, your business will stay ahead of the competition. 

4. The HR department also resolves conflicts within the company

HR employees know how to manage disputes and conflicts when it happens. It could be inter-employee conflict or issues between an employee and the organisation. 

5. HR enhances employee performance

The HR team can create plans that can accurately track employee performance. These plans can keep workers focused and successful in their jobs. 

6. The HR department ensures the company abide by the law

Your business could be hit with a lawsuit for a few reasons, such as hiring or termination practices. An HR department can help protect your reputation and finance in these circumstances. 

An HR personnel can help your employees in many ways including resolving conflicts.

HR tips for small business owners

If you want to establish HR for small business, you can follow these tips:

1. An in-house HR team is perfect if you want to interact with them face-to-face more often, and they can process technical solutions faster.  

2. If you want to cut costs, you should outsource your HR. Most of them are experts, and they are as reliable and efficient as an in-house HR team.

3. When choosing an HR personnel, make sure you are on the same page as them so they can manage employee resources without issues. 

4. You need to consult with your HR team before you create a new company policy to avoid any legal or productivity issues. 

5. Remember to document all HR policies. Your HR staff may come and go, but the HR processes and procedures have to stay. So, ensure that all HR policies are on paper. You can also create an employee handbook to capture vital company information.

6. Encourage everyone to learn or train. The HR team is not the only one that needs to know about labour laws and regulations. As an employer, you need to ensure you also stay compliant. The HR team can also deliver HR-related training to employees when required.

As a small business owner, you don't need to hire a full HR team. If you have five to ten employees, one HR personnel can handle all the HR tasks of a small business. You should also figure out which type of HR staff you need, you can hire in-house staff or outsource the HR staff.

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Source: Ringlead, Microsoft

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