The Need for a Strong HR in Small Businesses


Human resources is the glue of an organization, responsible for managing employee relationships while bridging the gap between a company and its people. Having an HR-centric mindset is essential, whether your company has five employees or 500. 

Unfortunately, many small businesses lack a strong HR presence. Here are the reasons why your small business needs HR and how to find the ideal solution.

Changes and new trends in small businesses and HR

While the passing of time forces evolution within all aspects of a business, HR is perhaps the most changed with each passing year. The combination of technological advances and changing social behaviors create a continuously-changing landscape for Human Resources professionals.

This article discusses the reasons why your small business could benefit from HR software, and it also mentions how to find the ideal solution.

Managing remote teams

One of the most significant shifts for businesses in the last century is the sudden transition in light of the global pandemic. For many small businesses, this unprecedented event forced workers into a work-from-home model while others had to navigate new regulations and safety measures that disrupted the status quo.

For HR professionals, managing remote teams is a new and complex responsibility. There’s no longer the ability to stop by someone’s desk and see how they’re doing. Combine this with the added stress from living in challenging times and sharing workspace with children, roommates, spouses, etc. In many regions, HR professionals are now navigating the return to work plans and employee friction.

Introduction of automation

Cloud computing and AI have revolutionized HR software, promoting both automation and centralization. For example, HR onboarding software now bridges the gap between hiring and employee management, ensuring systems like payroll and employee engagement are no longer in silos.

The introduction of automation has also caused disruption in other areas, which promotes the need for change management. HR is tasked with overseeing employee morale and engagement while these organizational changes take place. 

Prioritizing health and wellness

Now more than ever, small businesses are prioritizing the physical and mental health and wellness of their employees. Preventing burnout and promoting long-term employee engagement means taking a whole person approach to human resource management— in essence, accepting that life outside of work also plays a role in retention and employee morale. Viewing employees as humans rather than workers is paramount in the modern business ecosystem.

Why is HR for small businesses necessary


For many small businesses, HR is viewed as a luxury rather than a necessity. In reality, having an HR consultant or a dedicated individual overseeing HR-related tasks is a must for long-term success. Here are some of the reasons why.

Managing employee relationships

Having an intermediary who cultivates the relationship between employees and business leaders can help prevent miscommunications and ensure everyone is on the same page. Many business owners are skilled in the industry or field in which they start a business— not in business ownership itself. Handling HR-related tasks is a specialty best left to the experts.

Delegating administrative tasks

HR comes with several administrative functions, from onboarding to processing vacation requests. In small businesses, having a dedicated HR professional allows the owner to delegate administrative tasks so they can focus on revenue-generating activities.

Ensuring compliance

Legal and regulatory considerations for employee management are nuanced and complex. Failure to meet those standards can result in hefty fines and legal fees. Having an HR consultant on retainer can help small businesses navigate tricky situations without risk of liability. 

What makes a great HR for small businesses


While many of the core functionalities are the same, managing human resources in a small business is vastly different than a larger corporation. Here are some traits to look for when implementing HR in a small enterprise.

Thriving with limited resources

An HR professional in a small business must have the ability to thrive with limited resources. Finding ways to work with a small budget and limited bandwidth is essential for success. 

Prioritizing retention

Retention is essential for businesses of all sizes, but even more so for small businesses. It’s estimated that the average employee turnover costs a minimum of $4000 when both direct and indirect financial implications are considered. For small businesses, employee turnover could be devastating. HR professionals will have to prioritize hiring the right people for the job and ensuring they’re in it for the long haul.

Multitasking and versatility

When working with a small business, the HR department is often a one-person show. HR professionals who work with a small business will need to have strong multitasking skills and adaptability.

The future of the HR industry


The HR industry has changed dramatically in recent years, but those changes are far from over. Here are some upcoming trends in the HR industry to keep in mind.

Overseeing a blended business model

While many businesses are moving back to an in-person work environment, others plan to stay remote moving forward. Additionally, more companies are hiring remote workers and freelancers rather than full-time employees. This shift will put HR professionals in the unique position of managing blended teams.

Prioritizing internal upskilling

The “hire from within” mentality is making a big comeback as more companies work toward skills development as a part of a longer-term retention strategy. Upskilling is the foundation of this shift and goes hand-in-hand with hiring for potential.

Adjusting perks and benefits

With so many businesses embracing the remote work model, the benefits and perks that once appealed to employees no longer hold any weight— offering onsite daycare or free coffee in the breakroom have no impact if no one is at the office. 

HR professionals of the future will be tasked with innovating new perks to appeal to job applicants and employees. 

To ensure lasting success, small businesses need a strong HR presence to navigate employee relationships in unprecedented times. 

Adam Hansen

Adam is a part time journalist, entrepreneur, investor and father.