Entrepreneurial ventures all across the world, especially in the USA and China have seen the rise of numerous private businesses with not more than 100 employees. In fact, the number of small businesses has outnumbered large corporations. This has led to fierce global competition in every segment of the market. Moreover, this trend has also led to the growth of human resource management (HRM), even in small businesses. In an economy, when the margin of error is negligible, small businesses can’t afford to lose any chance for growth and expansion. We should not forget the fact that almost all giant businesses grew from very few employees to millions. In the process of their expansion, they had to take help of specialized HRM services for recruiting and retaining skilled employees.

How Human Resource Management Benefits a Small Business?

The question why HRM is important to small businesses doesn’t have a single answer. Human resource, as the name suggests, is all about managing people, the vital assets of any business or firm. At the helm of all its activities, the HRM department has only one objective in mind – to help employees perform better in the work and keep them motivated.

HRM Disciplines a Small Business
If a company is officially registered as per the national laws and rules, then no matter, it consists of 10 employees or 1000 employees, it has to follow the rules and regulations established by the governing authorities. As per some federal statutes in USA like The Fair Labor Standards Act of 1938 (FLSA), even a very small business with 1 – 14 employees has to follow standard rules of safety and care for employees. Similarly, there have been many other acts and reforms that encourage employers of small businesses to grant equal rights to employees in a small company, just like it is done in large corporations. This makes it clear that the value of even a small business is vital in the economic chain and hence practices of HRM, when involved in small scale organizations, can help in recruitment and motivation of best talents in the industry. HRM acts as a guide for the firm to create excellent professional relationships with employees. Lack of interlink between management and employees creates confusion and lack of understanding. HRM eases all the worries of the management by taking responsibility of hiring employees and ensuring that they work in sync with the employer’s expectations. It also ensures that rules, norms laid by different monitoring organizations (be it private or public) are followed by the company.

HRM Values and Respects People
Human beings need motivation, respect, love and appreciation. HRM department in a small business ensures that employees are happy and they are comfortable working in the firm. By hiring and training skilled talent in the market, HRM acts as great boost for improving prospects of success of small businesses. After all, better employees mean better productivity in the market. If there is no full-fledged HR department to recruit candidates, the entire recruiting process carries the risk of being a big failure due to recruitment of incompetent candidates. It can further cause waste of a small firms’ limited resources like time and money. In a company that has lesser employees (say between 10 – 100), HRM finds it easier to conduct training sessions, provide best feedback and administer the entire process of induction easily. For a dedicated HRM department, it also becomes simple to conduct team interaction activities and build a small network of strongly interconnected employees. This has great benefits in the long run, as the company grows as a bigger firm. The HRM also awards and recognizes employees for their performances, thereby keeping all the employees motivated. In small businesses, budget constraints can be an issue while negotiating salaries. Presence of HR manager helps an employer in the critical task of salary negotiation. The HR manager also decides the most interesting and economical way to award the best performers. HRM further works towards maintaining excellent working atmosphere for all employees.

So did you get why HRM is important to small businesses? It streamlines the entire task of employee management, making the firm a well managed storehouse of charged employees willing to give in their best and prove themselves. That is the reason why small businesses are aggressive these days, in their strategies to hire HR managers because ultimately, it is the people who make a company and if a boss can manage them well, success is bound to knock the door, sooner or later.