Why Human Resource Planning is Critical to Small Business Growth

Importance of HRWhen you’re just starting a business, there is so much to think about that it can be overwhelming.  Many new business owners work overtime and weekends for many months or even for years when they are starting out just to get the day’s work done.  Odds are you spend most of your time and energy working on the products and services which you offer to your buyers, but there is much more to running a business than that.

How much time do you dedicate to administrative concerns like human resources?  HR responsibilities can be challenging to balance along with other aspects of business, but how you handle your human resources planning is vital to the growth of your company.

A Company is Only As Strong As Its Employees

One basic fact of business, no matter what sector you are in, is that a company is only as strong as its weakest link, and all the links in your company are employees.  The human element is the single most important factor in business—not the technology you work with or even the product you develop.  It is human beings who are responsible for quality control, customer service, innovation, and adaptability.  Running a great company starts with top-notch recruiting and is an ongoing process.  How your human resources department handles employee benefits and other aspects of administration determines how happy your employees are and how long you can retain them.

Human Resources Planning Checklist

Here is a rundown of the different elements of human resources management.  You may be able to handle all these responsibilities internally, but if not, it can help to hire a professional employer organization (PEO) or another human resources outsourcing company to help you take care of your small business planning needs.

  • Recruiting procedures – Knowing where to look for the most qualified candidates and how to reach out to those potential employees and screen them with the best hiring questions and interviewing strategies is step one in running a great company.  That’s how you hire the cream of the crop.  Hiring productive employees ultimately saves your company money since those employees will provide you with the highest level of value.  Some of that value can be quantified in a dollar amount, and some of it is qualitative and can never be measured or replaced.
  • Employee training and development programs – Once you have actually hired employees, you need to provide training to those new hires as part of effective employee onboarding.  Some professions will require periodic training and updates as your procedures change (this is common with sales teams).  Others may require continual specialized training in technical subjects.  Your human resources department will be responsible for setting up these training programs in a manner that is cost-effective but also leads to maximum retention.
  • Retention and layoffs – You will also need your department to manage resizing, layoffs, and firings as necessary.  These decisions are difficult and often painful, but sometimes you have no choice but to downsize.  Just as important, you need to search for ways to retain the employees you do want to keep.  Employees often deal with dissatisfaction in the workplace and may search for better opportunities elsewhere if they do not feel you are looking after their best interests.
  • Employee performance evaluations – Not all companies implement an employee performance improvement plan, but doing so is beneficial not only for you, but also for your employees.  Touching base regularly with your employees helps them to enhance their strengths and curtail their weaknesses, and also demonstrates that you are involved and care about their progress.  Promotions are another important area where human resources staff are involved with making key decisions that can impact your entire company.
  • Employee compensation and benefits – Your human resources staff are responsible for managing payroll and also for structuring benefits plans and options which cover your employees’ needs.  There are many legal requirements governing benefits programs, and you will need to also ensure that you are conforming to your area requirements.
  • Taxes – Most employers withhold their employees’ taxes and send them off to the government.  This can be an extremely complex and time-consuming task, and one which can become expensive should your accounting team make errors.  It is essential that you do every step correctly so that your company can save money each year and avoid penalties and fees.
  • Developing an employee handbook – It is up to the human resources department to clearly communicate the rules and regulations of the workplace to employees.  An employee handbook is a comprehensive manual which covers issues relating to overtime, safety, dress code, behavior, hours, and more.  This is another aspect of employee onboarding.  By communicating clearly at the onset with new employees, your human resources department can prevent conflicts from arising later.  The employee handbook can also be useful to long time employees when issues arise.
  • Legal issues – Legal hassles do arise in any workplace from time to time.  Your human resources department needs to be experts in workers’ compensation and other legal matters so that you can avoid lawsuits or resolve existing ones with minimal financial and legal damage.
  • Conflict management and counseling – Not every business is going to run like clockwork all of the time, and even in the most cohesive corporate communities, personal and professional conflicts are going to arise.  Human resources staff members can help by coaching and counseling employees and recommending resolution strategies which can ensure the best outcome for everyone involved in a situation.
  • Corporate culture – HR staff members are responsible for ensuring that employees are happy and comfortable in the workplace, and one of the best ways to do that is by monitoring the corporate culture and setting the tone for day to day interactions and appearance.  Human resources departments can also set up corporate parties, awards ceremonies and other events that assure employees that they are valued members of the organization.  Trips, discounts, transportation, and many other little benefits may also be relevant, depending on the type of company you run.

Should You Outsource Human Resources?

Human resources management becomes more challenging the more employees you bring on board, so if your company is growing quickly, it’s going to become a pressing concern.  Your company can only continue to grow if you are able to effectively manage your human resources while not draining resources away from other important projects and administrative tasks.  If you are still able to juggle your responsibilities, taking care of all of the tasks outlined above, then maybe you do not need to outsource.  Maybe you will even hire your own specialized in-house HR team.  Those will be some of the most important employees you will ever hire.

Maybe you are struggling to handle all of your tasks, though.  If that is the case, you can free up employee time and resources and return your staff members to the areas where they excel by outsourcing HR.  There are a wide range of solutions available that are suitable for small businesses.  Employee outsourcing firms which provide the most comprehensive services and which assume the most control are PEOs.  If you prefer to retain more of the responsibility and control associated with HR tasks but still desire assistance, there are other HR outsourcing companies which can accommodate you.

There are also outsourcing solutions that largely take the form of software that can be used to streamline and manage your payroll and other tasks.  Your staff still handles everything, but the software makes tasks which were once time consuming and complicated fast and easy.  A customer service team is available on standby to help you out should you have any questions or concerns.

Human resources planning is a complex task which encompasses many different responsibilities, and it can be a daunting one for a small business owner.  As your company grows, so do your responsibilities.  The more effort you put into it, though, the more value your company will be able to provide to your customers and the more revenue you will make.  An effective HR department can recruit the best talent and provide for those employees so that they stay with your company for many years.  The human element is the most critical in any company.  No matter what business you are in, you will be able to grow your company more quickly and effectively if you allocate resources to strategically manage your employees.

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