Question

Explain why HRM is important to small businesses and how small business HRM is different from that in large businesses.

Answer 1

Why HRM is important to small businesses

Employees are a critical component of any business. Successfully managing the human resource aspect of business can be important, even for very small businesses. After all, in a service economy, employees are part of the delivery of the product and service. Their performance, commitment and loyalty to the job are critical and can be boosted through successful HR management.

Following Rules and Regulations.

One of the important functions of an HR department is ensuring that the company is compliant with rules and regulations that impact all aspects of the employee relationships--from hiring, to safety, to benefit administration and through termination. Even very small companies--those with one to 14 employees--must be compliant with the Fair Labor Standards Act (FLSA), the Immigration Reform & Control Act, the Equal Pay Act and others.

Effective Hiring Practices.

A good hire is one whose skills, knowledge and abilities match well with the requirements of the job and the culture of the small business. HR management can benefit a small business through the development and administration of processes that can help to minimize the odds of a bad hire. In addition, the hiring process can be fraught with risk in terms of discrimination claims, inappropriate questions asked during the hiring process and even reference checking. The HR function can help to manage these risks.

Benefit Administration.

While small companies may not be able to offer the depth or degree of benefits that larger companies can provide, there is still administration involved. HR management can benefit a small business by doing the research to determine which benefits can be provided most cost-effectively and managing the provision of those benefits, which often requires a great deal of administrative work and attention to detail. In addition, HR can benefit a company by being in tune with employees and the benefits that they value most.

Training And Development.

Training and development is important in any firm, but small businesses may be surprised to find that it can be more critical for them, particularly in terms of cross-training employees to cover more than one job function or task. HR management can benefit a small business not only by providing training for employees but by being aware of the many no-cost/low options that may be available.

Employee Recognition.

Small businesses that don't have large budgets can benefit from HR management in terms of employee recognition programs and activities that provide value and keep employees engaged and committed to the job. Even simple thinks like a "thank you" program can generate results. Taking the time to ask employees what's important to them and developing programs and activities to meet those needs can help minimize turnover and absenteeism, both of which contribute to higher staffing costs.

How small business HRM is different from that in large businesses.

Human Resources (HR) is different in small businesses than in large firms because they work more closely to the employees, in addition to their normal HR duties. If a company is officially registered as per the national laws and rules, then whether it consists of 10 employees or 1000 employees, it has to follow the rules and regulations established by the governing authorities. Employees need motivation, respect, love and appreciation. I feel that a HR department or personnel within small businesses, fills this niche need better because they have less employees to deal with. The Human Resource Management (HRM) department in a small business ensures that employees are happy and comfortable working in the company. HR in a small business also streamlines the entire task of employee management, making the company a well-managed storehouse of excited employees willing to give in their best and prove themselves. That is also a reason why small businesses are aggressive in their strategies to hire human resource managers, because ultimately, it is the people who make the company.