Skip to Main Content Back to Top Let's Talk
Home Blog HR for small businesses

HR for small businesses

Higginbotham H logo

When you have a small business, you might not think you need an HR department but if you have at least one employee, you must establish hiring protocols. Small business owners may not realize that human resource management takes a different skill set than typical business management. While your company may not be large enough yet to have a human resources manager, HR-related tasks must still be completed to successfully manage a business with employees.

As a small business owner, you likely have scalability goals for your business. However, while you’re planning your scaling efforts, you should also plan for future human resource management. As your team grows, including a strategy for human resources functions is an essential step in planning for your future. Whether you plan to hire in-house HR managers or outsource HR functions, having a plan is crucial.

Some HR functions should be prioritized as you are overseeing growth in your small company. Many business owners don’t effectively plan for human resources when they open the doors to do business, especially if they don’t have any employees yet. Planning ahead now will save you from any complications that could arise later. Let’s look at the priorities for HR for small businesses.

Establishing Systems

While you may not yet be large enough as a company to have an employee handbook, you’ll likely need one in the future. Hiring, disciplinary and even firing systems will bring order to the chaos of running a small business. In addition, employee handbooks are a good way to spell out employee benefits, employee performance expectations, anti-discrimination policies, direct deposit policies, workplace dispute resolution and any other expectations for employees.

An employee handbook is also a place to have your company culture and goals written out for all employees and clarify compliance protocols. There are labor laws such as the Fair Labor Standards Act, union laws for professions in a union and individual state laws that you must follow as a business owner with employees. The Medical Leave Act is another law that you must know about and be in compliance with. If you don’t have an HR professional, it will fall to you to ensure your business is following federal, state and local laws.

Workforce Planning

Small business owners and their HR professionals should work together to plan for the most productive workforce possible. HR practices should be designed with company culture and goals in mind. For example, suppose your goal as a small business owner is to have a certain level of workforce growth each year. In that case, your HR professionals need to be in the loop, knowing your expectations and having a plan to implement to help you reach your goals.

Labor laws provide an additional component to your workforce planning. Compliance employment laws will determine how many employees you can have working at one time. Performance reviews can help you determine what you and your HR team need to do regarding training or other employee retention tools.

Administrative Tasks

Most small business owners don’t realize the number of administrative tasks that they must maintain in order to keep their business running. When they don’t have an HR team, completing paperwork becomes the small business owner’s responsibility. Typically, administrative tasks include anything from payroll processing to ensuring you are following employment laws.

Administrative tasks of an HR department include maintaining employee records, including payroll details, benefits packages, wellness services and health insurance. They are tasked with processing payroll and maintaining accurate payroll records. Complicated tax deductions are managed by the HR department as well.


One of the primary HR responsibilities is recruiting qualified candidates to join your small business team. HR professionals are responsible for creating job descriptions to post on job boards or other recruitment platforms. In addition, they oversee the entire hiring process. Part of that process includes sharing the employee handbook with new employees and explaining company benefits and culture.

Hiring employees begins with posting available jobs but doesn’t end until after the onboarding process. Part of the recruitment process is employee retention. HR tasks include performance reviews, risk management and employee engagement.

Employee Training and Development

Human resources is responsible for the entire hiring process from writing job descriptions to performing onboarding tasks to helping employees grow through performance management. Management creates an employee handbook in conjunction with human resources professionals. The employee handbook is the first form of training for employees.

Small business owners who can’t afford an HR team might consider looking into HR services or free HR educational tools. HR services allow you to contract human resources tasks to outside entities.

Employee engagement training tools like the employee handbook are one way to start gauging employee satisfaction. Many employers think that employee compensation is the key to employee retention. However, positive employee relationships and supportive management are a better indicator of employee satisfaction and retention.

HR Technology

Small businesses usually have a small HR team, if they have any human resources personnel at all. A small business could have a one-person HR team consisting of an HR generalist tasked with enforcing company policies and ensuring the company is compliant with labor laws. In the absence of human resources professionals, small businesses must find a different method of meeting their HR needs.

HR software can help small businesses automate some of their most pressing tasks. The best HR software doesn’t replace human interaction but can bridge the gap between human resources needs and human resources capabilities. Small businesses can benefit from choosing HR software that automates some of the process, such as maintaining secure records. The right HR software can help small businesses manage their paperwork, compliance and benefits.


Establish HR Policies

No matter how small, your human resources department needs to be governed by specified HR regulations. If HR personnel are not following company rules, other employees may develop a negative attitude if these same rules are being enforced upon them. This perception can damage employee relations.

You should have hiring practices, benefits maintenance and record-keeping policies. Running a well-oiled machine is far less stressful than running a chaotic mess. Management sets the tone for the entire company and the hiring practices and records maintenance methods you choose will help set the tone for management.

When establishing your HR team, you should determine how the department will be structured. Small businesses face unique challenges when creating a human resources team. As a small business, it’s crucial to establish procedures and protocols. Without a plan, the daily operations of the business can become chaotic.

Keys to Creating an Effective Human Resources Department

As you create your human resources team, there are a few things to consider before constructing your department. Here are some of those considerations:

  1. Decide how you will organize the department.
  2. Create recruiting, hiring and onboarding procedures.
  3. Determine existing regulations for compliance, safety and health issues.
  4. Decide your company’s pay structure and benefits package.
  5. Maintain employee relationships and mitigate employee grievances.
  6. Create training programs and performance management protocols.
  7. Use human resources software to streamline hiring and record maintenance processes.

Keeping these steps in mind as you create your human resources department will help you incorporate human resources personnel more easily into your corporate structure.

Implementing Your New HR Policies

Once you’ve created the appropriate HR protocols, it’s time to implement them. As a small business owner, your HR team may be small, but that doesn’t make it any less important. Even if you have an HR team of one, implementing appropriate policies will streamline your hiring and file management to create smoother working conditions.

Creating the Best HR Team

Small businesses often think they don’t need HR personnel or protocols, but the truth is even if it’s one person, an HR team is necessary if you’ve hired employees. HR professionals understand the ins and outs of hiring practices, employee training and employee satisfaction. Administrative duties are handled by the HR professionals you hire. Reach out to us today and learn more about how Higginbotham’s HR packages can be tailored to your small business’s needs.


Not sure where to start? Talk to someone who wants to listen.

A great plan starts with a conversation. Let’s talk about what you need.

Let’s Talk

Request a Quote

Woman looking sideways to window in design office
Higginbotham H logo