6 Unique Characteristics of Small Business Human Resources -

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What makes the field of Small Business Human Resources unique according to our experts? They’ve provided some ways that an HR department works for SMEs. 

Human Resources departments, like any division in a business, change as your business grows. The downside to this reality is that when small businesses set out on their HR journey, managers will often fall into a trap of comparing themselves to significantly larger organizations who have access to a wider range of resources, all which increase the capabilities of their HR department. This comparison habit is not bad, however in doing so, many business owners overlook the unique needs their smaller organizations need to scale. So, what are the differences between a small business’ HR and that of larger organizations?


Small Business Human Resources Compliance

Due to the lack of resources, subject matter knowledge, or time, compliance is often overlooked by small business owners. When a compliance matter arises, they’re time consuming and expensive to resolve. Issues ranging from minor disputes to costly legal battles can cause significant setbacks to the organization and its stakeholders. Compliance issues can also negatively impact relationships with workers or the community in which businesses operates in. For small businesses, informal relationships as a result of less hierarchy can help employees and employers spot compliance issues earlier, if there is a workplace culture dedicated to continuous improvement.

For small and medium businesses, compliance is the foundation of an HR practice. Businesses that are HR compliant have workplace policies, an up-to-date employee manual that is reviewed regularly, as well as effective onboarding and training programs. These workplaces also adhere to health and safety acts, as well as disability codes. With resources available through provincial ministries of labour and local business associations, achieving HR compliance in your small business is much easier than it may seem.

There are plenty of tools available to help smaller businesses with their compliance efforts. Getting those foundational building blocks in place and having someone to turn to who understands how to maintain these elements is important. If a small business does not have the resources for a comprehensive HR program, there are organizations, like ours, that can assist in building a foundation based on compliance. We can also stand at bay ready to help when issues arise.


Using Small Business Human Resources to Attract Skilled Staff

Competitive HR programs and benefits are high up on the list of priorities for many job seekers today. This provides a unique challenge for small and medium business owners, many whom want to offer these benefits but do not have the financial means to do so. Being able to offer comprehensive compensation and benefits packages, while also supporting training and development opportunities can be extremely beneficial to long term success – if done well.

Fortunately, there are many levers small businesses can use to offer flexible HR programs and benefits. Consider the following:

  • Offering flexibility on hours and location of work
  • More opportunities for leadership roles and faster career progression
  • Support employees who want to learn a skill that would benefit them and company growth
  • Meet with each employee personally to learn what they want out of the business

The biggest advantages small businesses have over larger organizations is that they’re able to form interwork connections better and that there is more room to grow. Small business HR teams can leverage the smaller teams through flexible work schedules and locations. They can encourage career development by letting people take on roles related to where they want their career to go, helping the business grow in tandem.


The Role of Human Resources in Retaining Skilled Staff

Another consideration is the retention of existing employees, who can be enticed to join another organization that lines up with their financial needs and/or career objectives. If a small business is focused on attracting new employees, it can easily lose sight of retaining existing employees, especially key performers. A company with high turnover rates will spend great amounts of time on onboarding rather than growing the business.

What can small business HR departments do to retain their staff? There are a few things to keep in mind:

  • Clear communication on how the company is doing, making everyone invested in the future of the place in which they work
  • Offer chances to mentor new hires, be more involved in the growth of the business
  • Celebrate their wins and show how vital it is to the company growth, provide feedback when it’s appropriate


Small Business Human Resources Helps Career and Leadership Development

Training and development programs are often resource heavy, which can deter businesses from investing over fears of these programs providing no return on investment. Thus, formal opportunities for cross-training, learning resources, and on-the-job training are rare in smaller companies. An impact of this is that when a small business struggles to offer clearly defined career paths, workers will be pushed to look elsewhere when they decide to advance their career.

For small business owners, we suggest a change in perspective when it comes to investments in training, seeing how owners can help workers learn new skills that cater to their interests while also providing value to the business. A business might not need a graphic design department, but letting an employee take a graphic design course can enable the business to bring more advertising in-house in the future while also positively motivating the employee.

Compensation and Benefits

Work life balance, flexible work schedules, autonomy, personal wellness, and career fulfillment are all things high on the list of priorities for workers. HR programs that effectively address employee needs with regards to compensation and autonomy will see lower turnover and reduced costs associated with absenteeism and onboarding.

Designing a total rewards strategy is complex and needs to be carefully designed to drive desired behaviours while remaining affordable, especially if it includes specialized sales or executive compensation. Salary survey reporting and resulting analysis is a specialized skill and pay equity practices and applicable legislation need to be considered.

Many small teams benefit from having additional specialized knowledge or resources required to implement an effective compensation strategy. It is easier to meet employees in the middle when you have stronger connections with them.


HR Tools and Metrics

Small business budget allocations are often focused on technology upgrades, ongoing maintenance, or business development investments. Budgets specifically for HR tools that can increase administrative efficiency and provide valuable HR metrics are often delayed out of a necessity to triage.

Traditionally, HR tools have been “pen and paper”, spreadsheet or multi-system based which increases the risk of data entry error and inefficiencies associated with repeated data entry, analysis and reporting. Sourcing HR tools is time consuming and finding a solution that addresses the organization’s current and future needs can be confusing and cost prohibitive. However, finding the right tool can put small businesses on a fast track for growth. There are many benefits small businesses can reap:

  • Reduced time spent on administrative functions
  • More accurate data to base strategic decisions upon
  • Central tool for employees to monitor their time and career progress
  • Acts as an extension of your HR function where you might not have the personnel resources

Before you begin the process of identifying an HR tool, ensure that you have the right plan to enact a change in your workplace, or else your business can get caught in a timeloop of unsuccessful change management. We’ve outlined change management in small businesses before.

Read: Managing Change in the Workplace



If there is one big takeaway from all this, it’s for what small business lack in resources for HR, they make up for in their ability to be less rigid. Informal relationships are commonplace in smaller organizations and HR plans should change to reflect that. This close-knit community enables business owners to be flexible in compensation, employee retention and attraction, and offering chances to grow and develop skills.

Don’t just rush into HR development looking at what big organizations are doing and following suit, listen to your employees and the talent market in which you hire new employees to find out what they’re seeking from their employer. Plans that work for larger organizations will not fit the culture of a small business well. Find reliable resources, experts in small business HR, like ourselves, who can help you get on the right track, and the results will be phenomenal.