Understanding HR Needs in a Small Business

How HR Needs are Impacted by Limited Resources

The key differences between a large corporation and a small business relate to the limited resources available to a small business. Typically, a larger company has an HR department. This department is likely to have a professional staff specializing in areas such as recruiting, workers’ compensation, benefits, payroll, payroll tax, etc.

Let's take the example of recruiting, an HR function that brings challenges to any size business.  If I am a hiring manager, the impact of my hiring one top performer in a small business is much greater than if that same individual went to a larger company.

Then, if my business employs 10 people and I attract the best talent, my workforce is significantly upgraded.  In this case, 10 percent of my workforce just moved up.

In contrast, let’s look at a company with 10,000 employees.  While top performers are certainly needed, the impact of hiring one top performer, or one poor performer, is not as significant. So, in a small business, the risk is higher but so is the reward. If one poor performer is added to a group of 10 in a small business, the effect of bringing down the level of expertise in that group is much more significant. 

Example: Small Business Recruiting Limitations

Let’s think about HR-related expertise areas and further pursue my recruiting example:  If I’m a small business owner, and I’m trying to recruit without the benefit of HR expertise or an HR partner, it is more difficult and can be potentially risky.

First, as a small business owner or hiring manager, I draft an advertisement for either a newspaper or an online audience. Then (based on my own earlier experiences), I wait for the responses and the resumes start stacking up.  Back then, as a small business owner, l did not have a HR department. So, I sifted through the resumes and, in fact, I screened out qualified applicants who should have gotten an interview. 

I also know the reverse occurred. In the past, I scheduled interviews with individuals whose resumes looked great. Then, I would occasionally find myself sitting across the table from someone who, within the first 30 seconds, I knew was a mistake.  I would then find myself in a situation where I wondered, “What is the shortest amount of time I can possibly spend with this candidate?  I have made a mistake.”  That experience illustrates the inefficiencies and potential risks of not having professional HR support.

Expanded HR Services Help Entrepreneurs Positively Impact the U.S. Economy

In a larger company, you have an established infrastructure supporting and sustaining the organization.  As previously explained, a small business with its limited resources faces a greater burden.

This is why an HR-services outsourcing organization (like Administaff) can provide a valuable service to America's small businesses. An outsourcing organization helps free up a business owner's time, so they can focus on what they love to do. To a small business owner, their business enterprise is the fulfillment of their dreams and passion.

I love the entrepreneur in today's world because they are the risk-takers. Many left “Corporate America” because they dreamed of doing something bigger and better and impacting our economy in significant ways.