Why small businesses don’t feel the need to have an HR department?

Why small businesses don't feel the need of HR department

Table of Contents

The HR system is an integral part for any size of organization. Without HR segmentation, organizations cannot execute their functions efficiently for a long period of time. An HR system takes care of the entire administration, security and management responsibilities of a business. Complete data management of employees from entry, exit, benefits, training, development, work culture and everything is handled by the HR department.

In Small firms, business owners feel that they can handle everything on their own because the number of employees are limited and the work is less as a result of which they don’t require a full-time HR for employment. But in this situation, you can deploy a part-time HR or Outsource the HR department. You cannot bypass the need for an HR system even in a company with a few employees.

In each and every organization, there are certain lawsuits put in place by the government for states that need to be adhered to. Business owners can’t pay attention to each and every activity as a result of which they may miss the deadlines or may not be updated with the lawsuits and because of this, they may suffer a penalty.

Reasons for not setting the Human Resource Department in SME’s:

Fewer Employees:

There is less paperwork, so the business owners feel that they can maintain the information of the employees on their own. But, in this thought process most of the business owners experience failure, because at the time of exit, there are certain formalities hat need to be taken care of and when an employee asks for documentation, most of the times the company fails to provide complete and comprehensive documentation to the exiting employee. Since every administrative, HR and business work needs to be handled by the HR, having this department becomes the need of the hour.

Know how we can treat employees as our internal customers

Minimal application of lawsuits

In small organizations with a scale of 10-20 employees, they don’t have statutory and labor lawsuits to conform and adhere to. When we go beyond the prescribed limits, only then do they become applicable. So the small business owners feel that there is no need for conforming to compliances and if such is the situation, then why do they need and HR system in place? But in this case, we need an HR to be placed because we must have a record of each and every business operation and employee records from the time of entry to the time of exit of every employee. This is vital since commencement for every rapidly growing organization and such a practice would relieve them from unnecessary claims in the future from their employees.

Being their own boss

In many small companies, we find that business owners develop an attitude of being their own boss. They feel that a single person is enough to handle everything and this attitude of not dividing the work is what paves the way towards losses in the long run and hinders business growth and development. Whatever may be the decision, taking the advice of a specialist department always proves beneficial and it is the HR that can play the best role in this.

Less administrative work

Administrative work such as tracking records of employees such as sign in and sign out of an employee and taking care of the basic needs of the employee such as fans, AC’s, lights, chairs, seating arrangements, selecting a vendor for the purchase of office systems & stationery, arranging parties, snacks in the morning or in the evenings, notifying anniversaries and birthdays, taking care of the working ambiance to be neat and clean, etc are all tasks that will have to be taken care of by the business owners if they don’t employ an HR system in place. Irrespective of the size of the organization or nature of operations, these are the basic tasks that need to be carried out in each and every organization.

Payroll Management

Employees usually do not bother about the documentation process and their paperwork but are immensely concerned about their pay structures and pay scales. For instance, if an employee gets an uninformed deduction from their salary, it sets them thinking and forces them to shoot out queries about that particular deduction or something else that catches their eye. So the pay scale calculations and pay slips should be accurate. These types of calculations cannot be handled by the top management due to their hectic schedules, tasks that lay ahead of them and the planning they need to do for the near and distant future as a priority. Thus it is the HR department that steps in to take matters into its own hands and resolve any such issues. This signifies its need and importance.

Know How you can manage Payroll with Flexibility.

Why do SME’s need an HR Department?

The HR department is primarily concerned with managing people within the organization and at the same time, keeping up with the policies & procedures along with adherence to the system and functioning of the organization.

An important factor that needs to be paid heed to is having the right number of employees in order to ensure that the business does not face any hurdles in its operations. The HR Department in an SME ensures this and thereby also helps in optimizing cost.

The HR Department in an SME gives the organization an impetus for growth:

The talk of the day especially when an SME is involved is that of prolonged growth and sustainability for the organization as well as the employees. An SME might not have a comfortable start but in the long run, progress and development become essential which can be achieved by having an HR department of their own as specialization in such an aspect of business is pivotal.

To have a leading edge over the others:

By creating an HR Department of your own, you invest in the most valuable asset of your company- the people. The Department will help in aligning the vision and mission of the company with its practices and will also run the company compliance’s. The business will scale proficiently and this will give a competitive edge over the others in a market which features cut-throat competition.

Know about 8 Pack HR Mantra for SME’s and how you can utilize it!

An effective HR Department will help you hire the right talent for your SME:

History bears testimony to the fact that the success of any organization and especially that of an SME is its people. A startup or an SME will benefit immensely if they are able to form and have an HR department which will help find and secure the right talent with the right blend of expertise. This will help build a team that will last in the long run.

Achieving the vision of an SME:

It goes without saying that if nothing is ventured, nothing is gained and it is the “early bird that catches the worm.” This cannot suit an SME or a startup any better. Having an efficient HR department from day one enables an SME reach its vision, mission, and goals both in the short run and the long run at a rapid pace and this will drive the company further.

If you’re an SME’s and looking for an HR, we are ready to outsource HR for you. Please do contact us at reach@husys.com. We have a well-qualified professional’s and we love to hear from you.

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