When it comes to small businesses, one of the major characteristics of the HR department is that it’s usually just a few people, or maybe even just one person. When the business first begins the CEO or business owner usually fills this role, and then as the business grows they begin to delegate HR tasks. Eventually, whether in-house or through HR outsourcing solutions, a professional HR person is needed whose sole responsibility is HR management.
Small Business HR vs. Large Business HR
In small businesses, HR professionals tend to deal with everything themselves. This includes things like recruiting, training, payroll, and compliance. This is vastly different from large organizations who usually have someone that specializes solely in each area. Small businesses usually deal with things on a more personal, case-to-case basis without a lot of formal structure. Larger businesses tend to have formal and established structures, processes, and procedures in place. Another major difference between small and large businesses HR functions is that in small businesses the HR professional likely knows how the business is going and they can see how their decisions will impact the bottom line. HR professionals in large companies are not as connected to business outcomes. The last major difference is the availability and access to resources. Large business HR typically has the advantage in this category because they tend to have larger funds that allow for them to invest in not only the latest tools, but also information on recruiting, hiring, and training.
Easy HR Mistakes Small Businesses Make
When small businesses don’t dedicate enough time and resources to HR (which is usually hard to do), then it is easy for detrimental mistakes to be made. These mistakes can include things like hiring the wrong people. Employees are usually a major cost center, so adding a new one to the business is no small thing. If you don’t take the time to hire the right person, then you could be looking at a costly mistake. When a new employee is hired, often times the job description is not crystal clear. This can lead to a lot of confusion and wasted company time during the application process and once the employee is integrating into the business.
Another problem small business HR departments often have is that everything isn’t documented. This can become a major problem in situations when you need to terminate an employee. If there hasn’t been proper documentation of the employee’s performance or negative impacts on the company, you could accidentally find yourself in a wrongful termination suit. Discrimination or sexual harassment claims could ruin your company’s reputation and cost you a lot of money in attorney’s fees. Unfortunately, these situations can easily happen when incidents are not properly documented and when the HR professional is not well versed in employment law.
The last common mistake small business HR department’s make is not properly classifying workers. This is particularly important in relation to the Fair Labor Standards Act and whether or not the employer is exempt or non-exempt from overtime pay. Mistakes of these nature could get you into a lot of trouble with the U.S. Department of Labor.
How an HR Outsourcing Solutions Firm Can Help
Consider HR outsourcing solutions for your small business. HR outsourcing is the process of subcontracting human resource functions to an external supplier. You can subcontract some of all of the human resources to a specialist. HR outsourcing solutions are a good idea because small businesses can have a hard time keeping up with all of the changing laws affecting human resources. Reviewing handbooks, labor posters, and conducting HR audits is necessary to have a successful organization in the constantly changing business climate. Keeping up with these changes can be challenging when you’re attention is focused on other aspects of your business. Outsourcing your HR department will not only ease some of your burdens as a small business owner but will also improve your ability to manage your employees and complete tasks. They will be able to keep track of all of your personal files, write any important documents relating to HR functions, and ensure that everything stays up-to-date.
If you don’t want to completely outsource, consider hiring an HR consultant to assist you by providing you with legal expert answers that you won’t be able to find in a quick Google search. The HR consultant can write your employee handbook and hiring documents, as well as train your bookkeeper to handle payroll and benefits. After this, you can employ your HR consultant on an “as-needed” basis to defer questions to and to perform regular HR Audits. Your HR consultant will be much more familiar with dealing with these aspects of a business than you. Having a specialist advise you on how your HR activities should function will only help them run more smoothly. Reach out to an HR outsourcing solutions firm for more information and how to acquire their services to help your HR department run more smoothly.
