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BFS Capital Blog

HR: A Necessary Component for Today’s Small Businesses

February 19, 2013

HR for my small business? Really? you ask. Isn’t HR really just for bigger, more complex companies?

It’s not your father’s HR world anymore. Today HR is a necessary and critical discipline for businesses, large and small, across all sectors.

HR, or human resources, as it functions in current times, is almost unrecognizable from the HR of even five years ago. In fact, HR is now kind of an umbrella phrase for a dynamic and evolving complement of a variety of disciplines related to how businesses acquire, develop and manage their greatest resource: people.

And, while HR in a small business is less complex than in larger companies, underlying HR principles are the same. Some would argue that a professional HR perspective and function in a small business can have an even greater impact in small businesses, because with fewer employees, every HR decision or policy counts that much more.

In many places, HR was once the group that kept those ‘tiresome’ employee-related details away from management. HR administered payroll and vacation time; developed policies; recruited and screened potential hires; mitigated disputes; and often delivered bad news, as in ‘You’re fired.’  Within this kind of framework, HR was very transaction-oriented. An HR department was necessary (or questionable) overhead, as some in senior management wondered, ‘But what do they actually do?’

Most transactional activities like payroll are now outsourced or at least automated with sophisticated software. This has freed up HR functions today to be more strategic, a true management function, working more directly in support of business goals and objectives. ‘Employees’ are now ‘talent,’ and ‘talent management’—finding, developing and retaining the right people for ever-changing business needs—is a big focus in HR. Forecasting, training and re-training are also part of managing talent.

On’s Management blog, HR expert Liz Ryan recently wrote about what every CEO needs to know about HR. Change ‘CEO’ to ‘small business owner,’ and the information is just as relevant and timely. Ms. Ryan acknowledges that CEOS of even some of the most powerful companies in the world don’t readily know what HR is doing – or should be doing.  Drawing on her Fortune 500 experience, she provides a list of 10 critical areas of HR value and expertise, from helping to design a vision for the company to helping to build the company culture to contributing to a workplace founded on trust.

Writer Sherri Scott also writes about the multi-faceted role of HR professionals in achieving business goals.

If you weren’t on board before, as a small business owner, you should now be convinced that HR—in some form—should be a part of your business operation. It’s impossible, for example, to keep up and comply with employment laws. Then there’s diversity, once a nice-sounding term but now a necessary ingredient in doing business at any level. And then there’s the matter of how you find and develop and retain the right ‘talent.’ How important are your people? Steve Jobs was quoted as saying that the first 10 people hired will determine whether or not a business succeeds.

Maybe you’re not ready for a full-time, on-staff HR professional. Consider contracting with one first and building from there. As you grow, you can build your HR function in-house or outsource some or all of it. But you’ll probably still want to have some strategic input into your longer-range vision, goals and talent needs from a trusted HR advisor.

If you’d like more food for thought, suggests some essential small business HR resources. From the sources on this list, you’ll find answers to common HR questions, solutions to HR problems and a new understanding of the complexities of labor and employment issues in your business.

Image courtesy of basketman /