Is HR only for large companies?
Updated: Jul 25
Larger companies tend to set aside an entire department to handle the gamut of HR functions. Depending on the size of the organisation, there would be levels of management hierarchy. Each HR function would be handled by one or more persons, as per the requirement. Whether it's payroll management, statutory compliance, compensation & benefits, rewards & recognition, policies & procedures, employee relations, talent acquisition, talent management, performance management, workforce safety, learning and development etc. There is no single person trying to handle everything and instead each function has an experienced person(s) in the lead. Strengthening the HR department is the key, and large companies have it from within.
Now, all the functions mentioned above are required in smaller organisations as well. But can a small businessman afford time, energy & money in a good to have and not must have HR department? If not, can the HR functions be ignored or kept in the back seat?
In smaller organisations, irrespective of whether it has 2 or even 30 employees, the business owner needs to take care of the following HR functions:
Foster an accountable work culture
Engage and motivate employees,
Manage compensation and benefits,
Compliance with the labour laws,
Handle employee grievances,
Attract and retain talent,
Upskill existing employees.
So, even if the enterprise is small in size, there has to be someone, either the business owner himself / herself or an accounts / admin person taking care of the above functions. Another possible way is to outsource it to an external consulting firm. Before deciding on what is best for them, the business owner need to think on the following lines:
Can s/he put different hats for marketing, sales, operations, innovations, accounts, HR etc, be an all rounder and grow the company? In all likelihood, its not possible and that is where most of the businesses fail to grow, succeed or scale up. Even if the business owner is willing to spend the time and has the inclination to take care of HR activities, s/he need to ponder whether time spent in marketing, sales, operations will help the business grow or priority to be given to non-core activities like accounts, HR, IT?
Should an HR generalist be appointed for managing HR functions? Our take is - not to appoint an HR generalist till the business reaches a stage wherein s/he has an average of 5 to 6 hours of workload per day related to HR functions. Again getting an HR generalist with experience and expertise in all the above mentioned functions is a challenge.
Should HR functions be outsourced to an external consulting firm? We recommend you to read the articles Outsourcing HR functions and Selecting an external HR partner published earlier, before coming to the conclusion.
Now, what about the mid-size companies?
Mid sized companies can appoint 1, 2 or more HR persons in their HR department. Experience and expertise of these employees, their roles & responsibilities largely depend on the vision, mission, strategy of the top management, and their willingness to allocate funds to the HR department. Getting experienced and experts in HR is very crucial. Even in mid-sized companies, a couple of HR functions may be outsourced.
In nutshell, if the business owner is not pursuing an expensive hobby of running a business and instead wants to build a stable and successful business, HR should be given due importance especially in talent acquisition (recruiting is an art and science), people development resulting in higher employee engagement and employee satisfaction.
Resource availability is the main difference between small, mid-sized businesses and large companies. It's obvious that small and mid sized businesses can't allocate huge funds which large companies do. Because of this, there would be constraints and limitations to what the HR department can do in terms of employee development, fostering an accountability work culture, talent management, policy & procedure development, etc. Nevertheless small businesses can't ignore these key areas in HR operations. The only distinction being they have to approach these areas differently.
At Tamãrõ HR we partner with firms to help them manage their HR functions in the right way. The team at Tamãrõ HR has experienced professionals to help you with all your HR needs from Consulting, Recruitment to HR Operations. To know more contact mail to - firstname.lastname@example.org
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