What is the Role of Human Resources
in Small Business?

Many small businesses have less than five employees; they believe the role of human resources (HR) in their business is minor. However, even if you have only one employee, you will need to understand how to manage human resources in your business. And if you have more than five employees, you will need to develop a fairly comprehensive human resources program.

What is Human Resources?

All businesses require resources to execute their business operations plan (related to equipment, software, people, products or services). Human resources is the specific resources category of people who help you operate and run your business.

Your small business human resources issues are typically focused on:

• recruiting employees and hiring the best people for the job;
• coaching and counseling;
• firing employees or laying off staff during tough times or a business re-sizing;
• developing a new employee orientation process;
• training and developing;
• train staff on how to do an effective performance evaluation and build a performance review program for your employees, and even yourself;
• posting internal and external available jobs;
• developing an employee compensation and benefits structure specific to your business needs;
• ensuring that your benefits program meets the legal requirements in your area and is competitive enough to attract potential employees;
• promoting from within when possible;
• developing and communicating employee and business policies, in other words an employee handbook;
• ensuring that your human resources practices follow legal requirements in your area;
• developing job descriptions and job standards;
• developing conflict management strategies specifically for your business and coaching people on how to use those strategies;
• and more.

In all businesses, people are your most important resource and the most challenging to manage because you typically require people to help you managing and operating your business and because people are not machines and they do not respond or react in a predictable manner.

The role of human resources in small business is to focus on the people who are your human resources: you will need to learn how to hire, train, coach and mentor, and develop them to be great contributors to your business. Remember also that your employees often have some direct or indirect contact with your customers – you want to have capable, customer service focused, and happy employees in contact with your customers.

In a small business, with one or more employees, you may wish to consider the advantages of outsourcing your HR needs. Human resources outsourcing is quite common and there are many talented HR firms, practitioners and specialists who can provide you with support in key areas.

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