As a small business owner, you might be tempted to cut costs and eliminate your HR department. After all, resources are tight. And your managers can probably hire, terminate and discipline their employees without assistance from HR – especially if you only have a small team. Right?
Well, not exactly. There’s a lot more to human resources than hiring and firing. There’s payroll, benefits, performance reviews and more. And you have to make sure you’re doing all of that in compliance with state and federal laws.
So – does your small business really need HR? Absolutely. Here are a few reasons why – and a few ways you can implement it without breaking the bank.
1. Hiring and firing
Hiring a new employee can take a lot of time – time that, as a small business owner, you don’t have. If you have positions that needs to be filled (and growing companies often do), you need someone who can dedicate their time to hiring and everything that entails. That means recruiting, sifting through resumes, screening applications, setting up interviews, selecting candidates and more. Hiring new employees is incredibly important – you want to find the best talent and the best fit the first time around, so you don’t end up wasting time or money. And to do that, you need HR.
2. Employment law
Another reason you need a human resources professional? They know the ins and outs of employment law. All it takes is one mistake when hiring or terminating a staff member, and you could get slapped with a lawsuit. If you don’t know employment law, you could be putting yourself, your business and your reputation at risk. To avoid lawsuits and internal conflicts, retain an HR professional who knows how to remain compliant with state and federal laws.
HR professionals also have knowledge about what notices and posters need to be displayed in the workplace. Many businesses are required to post information about FMLA, OSHA and USERRA regulations. You also need to post information about state minimum wage, unemployment insurance, workers’ comp and more. HR professionals will know what you need to display and where, as well as when you need to update it.
3. Employee files
Did you know you need to keep not just one but three files on each of your employees? You need to have an I-9 file, a medical file and an employment file for each member of your team. If you don’t fill out and keep these forms, files and information accurately and in the right place, you could face fines up to several thousand dollars. HR professionals will know what files you need to store, when you need to update them, and where they should go, as well as keep them organized and easily accessible.
4. Handbooks and manuals
Do you have an employee handbook? If not, you should. Even if you only have a few employees, you still need a manual or handbook to lay out the rules, regulations and expectations you have for your employees. Handbooks make it easier for employees to know exactly what’s expected of them, but they can also be used to cover your back in case of employee disputes. One tip? Even if an HR professional writes and enforces your employee manual, you may want to have an employment lawyer take a look to ensure you are compliant with the law.
HR on a small-business budget
The bottom line? Even small businesses need some kind of HR presence. There are a number of things that human resources professionals can do for a business that other employees just can’t. You’ll save time – and likely money – in the long run by using HR from the start.
Keep in mind – you don’t necessarily need to hire a full HR department. One person may be able to handle all the HR duties of a small business. You can also consider hiring a part-time HR, compliance or recruiting consultant, or outsourcing your HR processes to an external firm.
What do you think? Can small businesses do away with human resources, or is HR something every business needs?
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