Employees are a critical component of any business. Successfully managing the human resource aspect of business can be important, even for very small businesses. After all, in a service economy, employees are part of the delivery of the product and service. Their performance, commitment and loyalty to the job are critical and can be boosted through successful human resources (HR) management.

Following rules and regulations

One of the important functions of a Human Resources Department is ensuring that the company is compliant with rules and regulations that impact all aspects of the employee relationships, from hiring, safety, to benefit administration and termination. Even very small companies - those with one to 14 employees - must be compliant with existing labour laws, such as Fair Labor Standards Act (FLSA), the Immigration Reform, Control Act, Equal Pay Act, among others.

Effective hiring practices

A good hire is one whose skills, knowledge and abilities match well with the requirements of the job and the culture of the small business. HR management can benefit a small business through the development and administration of processes that can help to minimise the odds of a bad hire. In addition, the hiring process can be fraught with risks in terms of discrimination claims, inappropriate questions asked during the hiring process, and even reference checking. The HR function can help to manage these risks.

Benefit administration

While small companies may not be able to offer the depth or degree of benefits that larger companies can provide, there is still administration involved. HR management can benefit a small business by doing the research to determine which benefits can be provided most cost-effectively, and managing the provision of those benefits, which often requires a great deal of administrative work and attention to detail. In addition, HR can benefit a company by being in tune with employees and the benefits they value most.

Training and development

Training and development is important in any firm, but small businesses may be surprised to find that it can be more critical for them, particularly in terms of cross-training employees to cover more than one job function or task. HR management can benefit a small business not only by providing training for employees, but by being aware of the many no-cost/low options that may be available.

Employee recognition

Small businesses that don't have large budgets can benefit from HR management in terms of employee recognition programmes and activities that provide value and keep employees engaged and committed to the job. Even simple things like a ‘Thank you’ programme can generate results. Taking the time to ask employees what's important to them, and developing programmess and activities to meet those needs can help minimise turnover and absenteeism; both of which contribute to higher staffing costs.

Role of human resources in small business

What is the role of human resources in your small business? People are your most important resource in your business. You need to use effective HR strategic planning techniques and strategies to manage your resources and minimise human resources issues. As a small business owner or manager, the people you employ are key to the success and sustainability of your business; And, because they are very important to your operations, you need to develop them to support your business goals.

Many small businesses have less than five employees and, therefore, they believe the role of human resources in their business is minor. However, even if you have only one employee, you need to understand what is ‘human resources’ and how to effectively manage human resources in your business.

HR is actually very important in small businesses, because of the significant impact one or a few employees can have on the business. And, if you have more than five employees, you need to develop a fairly comprehensive human resources programme, using HR strategic planning techniques and building those techniques and strategies into your overall business plan and operations.

Definition of Human Resources

All businesses require resources to execute their business operations’ plan (those resources are most often related to equipment, software, people, products or services). Human resources is the specific resources category of people who help you operate and run your business.

Focus your efforts on issues that can have the most positive or negative impact: engage in workforce planning development through your HR strategic planning activities, including recruiting of employees. From developing and hiring questions to interviewing and selecting the best people for the job, once you have got the best people, focus on developing the best employee retention tips and practices for your business track and manage human resources trends, coach and counsel employees to develop better skills, terminating or firing employees when necessary, or laying off staff if required to 're-size' or redirect the business; define orientation of new employees as a priority for success as you bring on new staff, and develop a process of continuous new employee orientation; build employee training development programs and link that training with performance goals through employee development plans, learn how to do effective performance evaluations and build a performance review program for your employees (and even yourself – a 360° assessment).

Use sample performance evaluations to help write the appraisals; when applicable, try to promote from within your organisation and post jobs internally (and externally) – this helps employees see that there is a future with the business; develop a structure for employee compensation and benefits programs that are specific to your business needs and the industry you operate in; ensure that your benefits program, and HR policies, meet the legal requirements in your area of operation and that they are competitive enough to attract, and keep good employees; develop and communicate employee and business policies, in other words develop an employee handbook.

For example, samples of employee handbook policies may include a conflict of interest policy, an overtime policy, safety procedures and expectations, and more. Develop clearly written and comprehensive job descriptions, as well as operating and/or job standards; understand the impact of conflict within your organisation, and develop conflict management strategies and conflict resolution methods specifically for your environment. Coach your employees on how to effectively use those strategies and methods; keep up-to-date with changing policies and ensure that you work on continuously improving your HR strategies – it is a lot of work but the people you employ, train and develop effectively will help your business be a success.

The role of human resources

In all businesses, people are your most important resource and the most challenging to manage. And you need these resources for managing and operating your business effectively. People are not machines – they do not respond or react in a predictable or consistent manner.

In a small business, with one or more employees, you may wish to consider the advantages of outsourcing your HR needs and/or outsourcing some of your internal resource needs (to minimise the demands on your time).

There are many talented practitioners and specialists who can provide you with the necessary support in key areas. If you would like more information or would like to be referred to someone who can help you in your business, contact me (please provide details as you make the contact about what you had like help with).

The role of human resources in small business is to focus on developing the best of the people who are your human resources. You need to learn how to hire, train, coach and develop them to be significant contributors to your business. Not all business owners have developed these HR skills; if you need help, work with a business mentor or coach.

For the success of your business and its future growth potential, you need to include HR strategic planning in your overall business plan process. Your employees often have direct or indirect contact with your customers, suppliers and other stakeholders: you want them to be capable, customer-service-focused and happy.

Increasing new employee’s success

New employees have a better opportunity for success when you provide a strong orientation for them on day one. But follow up on that orientation, make sure that they understand what's expected of them and that they have the training and the support to do well.

During the first week, set aside some time each day to check in with them and debrief; listen closely to what they have to say and see if they highlight areas of business or process improvement: sometimes new employees see things that existing staff just don't see any more.

Be sure to communicate progress and expected results regularly. Provide a written summary performance review after the first month; not at the end of the probationary period, as by then it may be too late. Make sure the summary provides both the good results and the areas for improvement, with feedback on how that improvement can be achieved. Communicate the organisation’s plan for the future, and how the employees contribute to those plans and mission.

Make sure that the culture of your organisation is one that attracts the type of people you want working for you. Assess your environment objectively, or hire someone to come in and do an employee survey or assessment for you.

Performance evaluation best practices

Provide feedback regularly and consistently (and frequently for new employees or those that appear to be struggling).

Recognise good work openly and in front of others

Consider poor performance as an area for improvement: focus only one or two improvement areas at a time. Provide employees with the opportunity for input into their evaluations. This should not be a one-way communication effort, rather it needs to be a two-way effort.

If there are action items that come out of the performance evaluation, and typically there need to be some goals or actions in each evaluation, then follow up: do not wait for a year to go by to check in.

For further details, call on me for in-depth discussions and training, send a message via WhatsApp or SMS.

•Lawrence Nwaodu is a small business expert and enterprise consultant, trained in the United Kingdom and the Netherlands, with an MBA in Entrepreneurship from The Management School, University of Liverpool, United Kingdom, and MSc in Finance and Financial Management Services from Rotterdam School of Management, Erasmus University Netherlands. Mr. Nwaodu is the Lead Consultant at IDEAS Exchange Consulting, Lagos. He can be reached via nwaodu.lawrence@hotmail.co.uk (07066375847).

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