Do Small Businesses, SMEs and Startups Need Human Resources (HR)?


In any business, no matter its scale, its most valuable asset is its people. This is where Human Resources (HR) steps in to play a vital role. Whether the business is a small business, an SME or a startup company, it will need at least some HR capability and resource Most businesses use HR in some capacity, as this department can support a plethora of responsibilities.

This includes anything and everything from ensuring a company complies with relevant laws and regulations, to recruiting employees, to maintaining the organisation and productivity of a company. To summarise everything that HR does, one can simply sum up its overarching goal as aiming to foster a positive, efficient professional environment.

Companies that offer effective effective human resources software include:

  1. Rippling
  2. Deel
  3. BrightHR

But in terms of how HR is structured in different-sized businesses, this department is inherently versatile and adaptable. There isn’t one fixed structure or set of responsibilities for HR; instead, it moulds itself to the unique needs of the business. So, how can we expect this department to operate within a small business? 

If you’re curious to understand the HR operations of a small business, or questioning whether a small business requires HR at all, just keep reading.


The Structure of HR in Small Businesses


While a HR department may not be deemed essential or even feasible for a small business in its early stages, which may be unable to accommodate such a capacity, small businesses can benefit significantly from having a HR department. 

In smaller organisations, the scale of HR operations may simply need to be more modest compared to larger companies. After all, its role in fostering a positive work environment and managing employee-related aspects is just as crucial for the success of a small business as that of any other. 

Furthermore, a company doesn’t even need to have its HR department set in stone from the day it opens. At a minimum, it can simply begin by having an HR manager who can establish the groundwork of the company’s policies and structuring, for example, overseeing operations such as recruitment, employee development, and law compliance. It may even be worthwhile investing in some HR software to support the establishment and growth of the department. 

If the scale is too limited to have a dedicated member of staff as the HR representative, consider integrating HR functions into existing roles to spread essential HR tasks among current employees. Emphasise open communication and collaboration and then, by keeping the structure flexible, the HR department can adapt to the evolving needs of the business. 


Common HR Mistakes to Avoid in Small Businesses


In any small business, the initial HR setup might be somewhat makeshift. Initially, the department might be managed by a single representative or integrated into other roles. While this arrangement may suffice in the early stages, it’s important to recognise the need for adaptation as the business expands. 

Furthermore, in small businesses, especially startups, unintentional violations of laws and regulations can be a lot easier to stumble into, as there may be no large-scale HR training in place. It can be easy to assume the business can run smoothly simply by following the ethics and business knowledge of its employees, but any business must be aware of their responsibilities and compliment with the law.

Finally, employers may assume that their HR department doesn’t need to provide competitive perks and benefits just because they are a small business. But it’s vital to offer benefits packages that can compete with those of larger businesses. And, going forward with employees, amidst the busyness of growing a small business, it’s important to keep employee development in mind. Neglecting benefits packages, progression and training opportunities can prompt staff to reconsider their positions and seek career advancement elsewhere.


The Importance of HR in Small Business Success


As discussed, the role of HR is, ultimately, to care for the well-being of employees. While this is crucial in any context, it holds particular significance for the success and growth of a small business. Effective HR not only attracts top talent but, more importantly, aids businesses in actually retaining these valuable employees.

By cultivating a positive workplace and offering incentives to support employees’ development, HR can help businesses to sustain employee satisfaction and interest, subsequently encouraging them to continue their professional journey there. Not only can this spark enhanced productivity and work quality, but it can foster a gradual scale-up of the company as an increasing number of employees are eager to work there.