Why is it important for Small Businesses to have a Human Resources function?

Many small business owners think they do not need a Human Resources function. They usually think this is something only large companies use, that it is not cost effective, or that they will be constrained in their decision making. In fact, having a properly functioning Human Resources department that suits the needs of your small business will actually cut down on overhead costs and allow for more creative, constructive, and consistent decision making.

Some statistics:

  • 1/3 of job applications and resumes are embellished, distorted, or otherwise falsified (CNN.com, 2000)
  • 30% of small business failures are the result of employee theft and dishonesty (United States Chamber of Commerce)
  • Almost 1/4 of all job applicants have criminal records or test positive for illegal drugs
  • Millions of dollars are paid out every year in awards for harassment, negligent hiring, workers compensation and other legal claims
  • Hiring illegal aliens can result in fines up to $10,000, with a significant increase in the last few years.

A properly designed and implemented Human Resources function would help ensure that your company does not become part of these statistics. It will:

  • Help business owners and managers find more time in their day by ensuring consistency in messages that are communicated about how things are done and reinforcing the company’s vision, mission, and values.
  • Save the company money through reduced turnover, decreased complaints and lawsuits, and improved productivity.
  • Allow the organization to respond quickly to change resulting from internal or external factors.

When incidents occur and there is no system in place to assist, the consequences have a greater negative impact on a small business as opposed to a large one, and they always cost the company time and money. A small company needs everyone working efficiently and effectively as a team because there is no one to fill in the gaps when things go awry.

Protect your business and ensure your longevity and growth by implementing a Human Resources function in your small business.