The essential role of HR management for small businesses

The importance of HR in small businesses

Effective recruitment and staffing

Hiring can be time-consuming and strain a small business's limited resources. A rushed interview process or failing to ask the right questions can lead to poor hiring decisions, potentially resulting in significant costs.

Small business HR professionals typically have extensive experience managing the entire recruitment process on their own. For example, HR professionals can create targeted job postings on relevant HR platforms or job boards, soliciting employee referrals and using social media – such as specialist LinkedIn and Facebook job groups – to attract candidates.

Training and development

Investing in staff development helps cultivate a competent and engaged workforce. But small businesses may struggle to create and execute efficient employee training and development programs.

HR professionals can help by designing personalised internal training or organising specialist external training. They may also implement cost-effective internal mentorship programs and use e-learning platforms to enhance employees' development.

Benefits of HR management for small businesses

HR services add value for small businesses in a variety of ways, including:

• Attracting top talent
• Creating a better onboarding process
• Increasing the rate of talent retention
• Providing advice and guidance on disciplinary procedures
• Ensuring the company offers competitive benefits
• Increasing employee productivity
• Managing training and development
• Promoting employees' overall well-being
• Fostering a positive workplace culture
• Measuring and improving employee performance
• Maintaining workplace safety standards
• Establishing hassle-free offboarding

These benefits help employees feel valued and engaged, putting businesses in a better position to achieve their goals. 

HR supports strategic growth initiatives

HR management helps small business owners focus on business planning and growth. Owners benefit from expert HR advice on leadership imperatives, such as crafting a mission statement.

The role of HR in performance management

HR-supported performance management functions help ensure employees are aligned with the company's goals. Benefits include flagging and resolving shortcomings in performance, raising employees' abilities and skills, improving employee productivity, and recognising high performers. Performance management also helps open up an honest dialogue between employees and managers, which enhances teamwork and cooperation.

HR consultants can create and administer consistent and equitable performance management programs. They can also coach business leaders on how to have constructive conversations with employees about their performance.

Stay competitive with employee benefits

Offering the right benefits to employees helps small-business owners recruit and keep the best people, setting their company apart from the competition.

HR professionals offer helpful insight into developing competitive packages, which may include additional leave allowances, fertility benefits, lactation facilities, transgender health care, mental health support, telemedicine, caregiving benefits, or a home office stipend, among others.

HR can survey employees to help business owners develop a cost-effective benefit plan based on the most in-demand benefits. They can also conduct annual reviews to ensure they’re continuing to meet employees' evolving needs. 

Acquire and retain top talent

Today's competitive job market may make it difficult for a small business owner to find qualified people. Recent ManpowerGroup research shows 75% of global employers experience difficulties finding qualified job candidates, compared to 36% ten years ago.

There are many reasons why finding suitable candidates is challenging. For one, work-from-home allowances enable qualified people to access opportunities across the country—or even around the globe. The gig economy has also made it easier for skilled people to find freelance work versus full-time.

Additionally, applicants today often prioritise company culture when selecting an employer. HR consultants help you position your company more favourably in job ads and recruitment processes, boosting your chances of attracting applicants.

HR services for small businesses can save a busy small business owner countless hours and days managing the hiring process, from screening resumes to interviewing and making recommendations.

HR professionals can also help you develop ongoing training and upskilling opportunities to entice prospective candidates and keep current employees engaged. That’s more critical now than ever before, as rapidly changing technology – such as automation and artificial intelligence – may require employees to learn new skills to progress in their careers.  

Build a positive company culture

When a company culture is positive, employees are more likely to feel happy, secure, and confident, decreasing turnover whilst boosting morale and productivity.

One of the responsibilities of HR consultants is to ensure all employees feel a sense of belonging. HR can have a positive impact on the company culture by:

1. Establishing a positive impression of the company right from the start, during the interview process
2. Developing an effective onboarding program to bring employees up to speed
3. Assisting small business owners in cultivating and representing the company’s culture
4. Crafting or reviewing policies to ensure behaviours and norms align with company culture, like trust, respect, and integrity

How HR helps boost company culture

Here are five steps for creating a great company culture with the assistance of HR management for small business:

1. Establish your core values and define your culture: emphasise the significance of your company's core values at every opportunity. A core value could be 'integrity,' which can mean, for example, "We always act ethically, giving others credit and recognition for their work.”
2. Promote open and constructive communication: coach staff at all levels to use honest and respectful communication that contributes to a healthy and productive work atmosphere. For example, you might ask managers to seek employee input before making significant decisions or encourage employees to regularly share ideas and knowledge.
3. Support employee growth and development: consider offering employees additional resources and opportunities to enhance their skills and grow professionally. This may start by ensuring fair and impartial performance reviews that offer regular, constructive feedback.
4. Make employee recognition a top priority: genuine employee recognition is one of the most powerful ways to create a positive workplace culture where people feel valued. Consider setting up a program to acknowledge and reward employees for outstanding performance, showing appreciation by providing development opportunities and/or increased compensation.
5. Establish a wellness program to prioritise employee well-being: mental health services help employees feel safe and supported. There are many ways to foster employee wellbeing, such as organising manager training initiatives focused on identifying behaviour changes and burnout.  Third-party organisations like Black Dog Institute offer essential insights and resources to help small businesses enhance mental health awareness and improve outcomes.

Key takeaways

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