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Why Human Resources is Important for the Success of Small Businesses

October 21, 2016

 

Most businesses have started their 2017 strategic planning.  We encourage you to remember Human Resources needs in your planning process.  The misnomer that a robust Human Resources strategy is important only for large businesses has fallen by the wayside.  Why do small and mid-sized businesses need to include Human Resources in their strategic planning?  Well, for small businesses, human capital management is critical to success due to the large percentage of employees who perform cross-functional duties. Said another way, in a smaller workforce one person can have a huge impact on the company’s success or failure.  This is all the more reason why each and every position must be strategically aligned and closely monitored.  Beyond that, here are ten other reasons for your consideration:

 

Strategy:  Human resources identifies how human capital impacts organizational success.  For example, strategic planning and decision making must always take into account current and future staffing needs.

 

Liability & Compliance Issues:  Minimize your company’s risk and exposure to unfair employment practices.  Monitor compliance with applicable laws.  Unresolved workplace issues can spiral out of control, resulting in costly and time consuming litigation that not only adversely impacts your bottom line, but also your reputation with clients, vendors, and the community.

 

Employee Development:  New employee orientation, on-going employee training/development, and skill assessment are all essential to maintaining a strong relationship with your employees while at the same time reducing costly employee turnover.  It also enables you to identify members of your workforce with an interest in life-long learning and career development.  Small businesses in growth phases particularly benefit from identifying key personnel who possess the skills, knowledge, and abilities to promote your company’s culture and business strategies.  Through succession planning, human resources will help you identify employees with the capabilities to grow transition into leadership roles.

 

Recruitment:  Proper screening of resumes and unbiased interviewing procedures not only protect your company’s brand but also deliver the candidates with the highest alignment as it pertains to culture and technical skills.  With a well-planned recruitment and selection process, human resources minimizes the amount of time and money spent recruiting new personnel.

 

Compensation:  Compensation plans competitive with similar job functions within other businesses in your region enables you to attract and keep top talent.  Realistic wage-setting enables alignment with the company’s current financial status, cash flow, and projected revenue. 

 

Benefits:  Human resources professionals help reduce costs associated with turnover and attrition by negotiating the best possible group benefit packages aligned with the expectation of today’s workforce, the company budget, and current economic trends.

 

Employee Satisfaction:  Identify problems that help or hinder your employees from attaining a high level of engagement and performance.   Consider climate surveys, focus groups, exit interviews, and other methods to gather employee input.

 

Safety:  Workplace safety & risk management, and compliance with OSHA regulations, promote awareness and reduce the number of workplace injuries.  Remember, OSHA visits your workplace AFTER a complaint has been submitted, and it is therefore imperative to know what the regulations mandate and to be proactive. 

 

Conflict Resolution:  Given the different personalities, work ethics, backgrounds, and experiences among the employees in any given company, workplace conflict is considered inevitable.  A Human Resources professional trained in employee relations strives to identify and resolve conflict before it escalates out of control. 

 

Employee Reviews:  Human resources personnel develop performance management systems and review protocols.  Measuring performance and position/skill alignment can reduce wasted money on low performing employees.

 

In conclusion, the above represents only some of the reasons that human resources should be considered not only as important to small business as it is to larger companies, but likely MORE important.  If one person can impact your company’s future, it is logical to establish and maintain a strong strategic vision for every member of your workforce!

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