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The Role of Human Resources in Small Business

What is Human Resources (HR)?

What is the role of human resources in your small business? People are your most important resource in your business, you need to use effective HR strategic planning techniques and strategies to manage your resources and minimize human resources issues. As a small business owner or manager, the people you employee are of key importance to your business - you need to develop them to support your business goals.

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Many small businesses have less than five employees; and therefore they believe the role of human resources (HR) in their business is minor. However, even if you have only one employee, you need to understand 'what is human resources' and how to effectively manage human resources in your business.

HR is actually very important in small businesses because of the significant impact one or a few employees can have on the business.

And if you have more than five employees, you need to develop a fairly comprehensive human resources program; using HR strategic planning techniques and building those techniques and strategies into your overall business plan and operations.

What is Human Resources?
A Definition of Human Resources

All businesses require resources to execute their business operations plan (those resources are most often 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

Focus your efforts on issues that can have the most positive, or negative, impact:

  • engage in workforce planning development through your HR strategic planning activities;
  • recruiting employees: from developing hiring questions to interviewing and selecting the best people for the job;
  • once you've got the best people, focus on developing the best employee retention tips and practices for your business;
  • track and manage human resources trends;
  • coach and counsel employees to develop better skills;
  • terminating or firing employees when necessary, or laying off staff if required to 're-size' or redirect the business;
  • define orientation of new employees as a priority for success as you bring on new staff, and develop a process of continuous new employee orientation;
  • build employee training development programs and link that training with performance goals through employee development plans;
  • learn how to do effective performance evalutions and build a performance review program for your employees (and even yourself - a 360 assessment). Use sample performance evaluations to help write the appraisals;
  • when applicable, try to promote from within your organization and post jobs internally (and externally too) - this helps employees see that there is a future with the business;
  • develop a structure for employee compensation and benefits programs that are specific to your business needs and the industry you operate in;
  • ensure that your benefits program, and HR policies, meet the legal requirements in your area of operation and that they are competitive enough to attract, and keep, good employees;
  • develop and communicate employee and business policies, in other words develop an employee handbook. For example, samples of employee handbook policies may include a conflict of interest policy, an overtime policy, safety procedures and expectations, and more.
  • develop clearly written and comprehensive job descriptions, as well as operating and/or job standards;
  • understand the impact of conflict within your organization, and develop conflict management strategies and conflict resolution methods specifically for your environment. Coach your employees on how to effectively use those strategies and methods;
  • keep up-to-date with changing policies and ensure that you work on continuously improving your HR strategies - it is a lot of work but the people you employ, train and develop effectively will help your business be a success.

The Role of Human Resources

In all businesses, people are your most important resource and the most challenging to manage. And you need these resources for managing and operating your business effectively. People are not machines - they do not respond or react in a predictable or consistent manner.

Need Help?

In a small business, with one or more employees, you may wish to consider the advantages of outsourcing your HR needs and/or outsourcing some of your internal resource needs (to minimize the demands on your time).

There are many talented practitioners and specialists who can provide you with the necessary support in key areas. If you would like more information or would like to be referred to someone who can help you in your business, contact me (please provide details in the contact form about what you'd like help with).

The role of human resources in small business is to focus on developing the best of the people who are your human resources. You need to learn how to hire, train, coach and develop them to be significant contributors to your business. Not all business owners have developed these HR skills; if you need help, work with a business mentor or coach.

For the success of your business, and its future growth potential, you need to include HR strategic planning in your overall business plan process. Your employees often have direct or indirect contact with your customers, suppliers and other stakeholders: you want them to be capable, customer-service focused and happy!

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Increasing New Employee Success

New employees have a better opportunity for success when you provide a strong orientation for them on day one.

But follow up on that orientation, make sure that they understand what's expected of them and that they have the training and the support to do well.

During the first week, set aside some time each day to check in with them and debrief; listen closely to what they have to say and see if they highlight areas of business or process improvement: sometimes new employees see things that existing staff just don't see anymore.

Be sure to communicate progress and expected results regularly. Provide a written summary performance review after the first month - not at the end of the probationary period - by then it may be too late. Make sure the summary provides both the good results and the areas for improvement - with feedback on how that improvement can be achieved.

Communicate the organization's plan for the future and how the employees contribute to those plans and mission.

Make sure that the culture of your organization is one that attracts the type of people you want working for you. Assess your environment objectively - or hire someone to come in and do an employee survey or assessment for you.

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Performance Evaluation Best Practices

Provide feedback regularly and consistently (and frequently for new employees or those that appear to be struggling).

Recognize good work openly and in front of other.

Consider poor performance as an area for improvement: focus on only one or two improvement areas at a time.

Provide employees with the opportunity for input into their evaluations - this should not be a one-way communication effort, rather it needs to be a two-way effort.

If there are action items that come out of the performance evaluation, and typically there need to be some goals or actions in each evaluation, then follow up - do not wait for a year to go by to check in.