HRM for Small and Medium-sized business

How is HR in small companies different from HR in large companies?

Similar goals, different ways

HR in small companies and HR in large companies differ mainly in terms of size, responsibilities, resources, and recruitment. These differences can often be observed in the presentation and implementation of policies and procedures in companies. In terms of HR practices, the two HR teams “strive daily to achieve the goals that create a path to success… HR creates the partnerships that build the future,” says HR Affiliates, a leading provider of HR support services for small and large companies. The way HR teams build that future is surprisingly different for small businesses and large corporations. Both may have similar recruitment, problem-solving, planning and development objectives, but their ways of achieving those objectives are far from the same.

It is important to understand these differences as an HR professional, especially if you are in the process of obtaining a degree in human resources or looking for a new job in HR. Knowing what is expected from a small business compared to a large company can help you determine which area you want to enter. With this in mind, here is a more detailed look at the differences between HR work in small companies and that in large companies.

Size, Responsibilities, Resources, and Recruitment

Human resources managers and their teams are responsible for effectively planning and developing solutions for their company in order to achieve the company’s objectives through its employees. This is one of the main tasks of the human resources department, whether in a small company or a large corporation. With this in mind, it is important that HR departments recognize that employees should be trained and encouraged to work in a way that guides and supports the company’s goals. To achieve this, small businesses must recognize that their size, responsibilities, resources, and recruitment methods are different from those of a larger company. Achieving the HR mission of a small business requires a specific approach.

Size

The size of the business is the obvious difference between a small business and a large business. From office space and number of employees to a number of customers and production levels, everything in a small business is exactly that small. The human resources department of a small business is no different. A typical small business can have between 1 and 5 employees. Working as an HR professional in small business most likely means that you will have other responsibilities in addition to the HR department.

Large companies generally have various levels of management, while small companies are mostly flat. Larger companies have more employees who can take on a variety of roles at all levels, including management. Smaller companies simply don’t have as many employees available. While large companies may have an HR manager who oversees HR assistants in their day-to-day tasks, a small company may have an HR employee who acts as a manager, assistant, recruiter, and all-in-one professional. That’s why, front-line employees are typically responsible for a wider range of tasks than employees with similar job titles in larger companies. That brings us to the second difference between small and large companies: responsibility.

Responsibilities

With a small business comes a small number of employees. Roles and responsibilities often overlap to get the job done. For example, you could be the HR manager and the assistant to the managing director. You can also be the HR manager and accountant. HR units in small organizations are sometimes forced to play a more reactive role because of the constraints of a small team or, in many cases, a single person, a business management expert. In other words, not only do you have two positions in the company, but your role as an HR manager literally covers all HR tasks, including payroll, benefits administration, staffing, and planning and developing organizational growth.

In contrast, large organizations tend to reserve an entire department to handle HR tasks, freeing up entire floors for other roles. With an entire department dedicated to payroll, benefits, policies, procedures, and development, no one tries to manage it all at once. Each work area is usually managed by an expert. Support is essential, and large companies get it from within. Working in a large company certainly offers you the advantage of getting help and support from all directions. Overall, it can reduce your workload because you don’t try to do everything on your own.

Resources

The availability of resources is another difference between small and large companies. It is obvious that small businesses do not generate the same type of revenue as large businesses. For this reason, there are limits to what the HR department can do in terms of employee training, team building and the development of policies and procedures. This does not mean that small businesses are unaware of these key HR areas, but it does mean that they need to approach them differently.

If you hold an HR position in a small business, you should be prepared to be creative when it comes to advanced programs to train staff and foster internal growth. One way to develop the business and boost employee morale is to use mentors to support the business. Mentors are professionals in the field who come at low cost or on a volunteer basis to advise employees on how to run the business and increase sales. HR affiliates note that “mentoring activities are strong for upward mobility in small, growth-oriented businesses. Mentoring has become a creative and effective way to improve morale within a company and to promote the growth of the company and its employees. Mentoring is also more cost-effective than one-day conferences or team-building retreats.

Recruitment

Recruitment, or rather the hiring of employees, is also done in a different way. Recruiting employees is a major time and cost factor for small businesses. While large companies have funds available for background checks, multiple interviews, etc., small companies get by simply searching social media, checking references and calling the potential employee for a final interview. Budget and time constraints limit the recruitment effort. Internal job postings are a popular method for mid- and senior-level positions. Smaller recruitment methods such as newspaper ads, social media and job postings on LinkedIn, as well as the use of employee referrals, are often the largest recruitment efforts for which small businesses have time and money. Employees are typically a significant cost center and employee turnover can have a negative impact on the company’s bottom line and reputation. The impact of these issues is much greater for a small business.

Differences can mean a positive benefit

While it may seem that small business is at a disadvantage in terms of size, responsibilities, resources, and recruitment, there are actually many positive aspects of working in HR for a small business. Smaller size often frees small businesses from the mandatory laws and regulations that larger companies must comply with. For example, if there are not enough employees or hours per day to effectively perform the duties of an HR manager, an HR firm could be tasked with meeting all legal requirements and relieving the already heavy shoulders of small business employees.

Similarly, when it comes to offering attractive employee benefits, a small business may not have the budget to offer high salaries or large pension plans, but because of its small size and a limited number of employees, other benefits can easily be put in place. For example, a more relaxed dress code, flexible hours and a relaxed, stress-free work environment can be offered. As mentioned earlier, mentoring programs are also very attractive to some of today’s young candidates.

Medium-sized companies have often moved from small to large enterprises, making it difficult for owners and managers to adapt to the higher sales volume and a larger number of employees. Since small businesses often spend 25–35% of their time managing HR needs, the time required to manage a larger workforce with more demanding requirements can become unreasonable as the business grows.

Integrating HR software designed specifically to meet the needs of mid-sized companies can help them adapt and grow.

Are you a small business owner? If so, you’re probably a very good multitasker! However, do you really have the time to deal with the endless and tedious personal details of your employees? Probably not. I know what you’re thinking: the very last thing you have time to do is research which suite is best suited for your business.

Have you heard of Human Resources (HR) software!

You’re pretty sure your current methods won’t fit well, but you don’t know what to replace them with? In case you’re not familiar with what’s available, here’s an overview of the HR software features that most small businesses typically need.

First, the basics. Every business needs a way to track employee payroll. Payroll includes a large amount of information: salary, hours, benefits, tax deductions and bonuses. Each of these aspects produces a wealth of data, and HR software will help you not only enter this data but also manage it.

Tracking employee attendance and leave is directly linked to payroll. A fundamental part of calculating an employee’s pay is knowing whether he or she is working the required hours. In addition, accumulated vacation, sick leave, and personal leave will also affect the employee’s bottom line.

Finally, another key function of any HR software is the ease of use. If the interface isn’t easy to navigate and accessible, no matter how much fancy data it compiles, it won’t be useful to your business. In addition, compatibility with other systems already in place is essential. The benefits of introducing new HR software into your existing business model are greatly reduced if it is not confused with your other systems.

Now, what about functions that would be beneficial but not universally essential? A common function is a recruitment. If your company is small, every hiring decision must be extremely efficient. HR software can help you determine exactly what you need so that you can better find the right solution for each position. If you can effectively hire and recruit the right employees, turnover and overhead costs will likely decrease. The more your HR process is automated, the more routine and tedious tasks can be taken away from you. Imagine freeing up your time for staff development and management rather than spending it on laborious manual tasks.

Hiring new staff

As a business grows, it is important to hire the right people to meet the demand. Unfortunately, poor hiring decisions can cost a business dearly. Mid-sized businesses may not have the financial cushion to survive several or more bad hiring decisions.

HR software can help mid-sized companies in many ways when hiring employees. The software allows owners, managers or hiring employees to quickly and easily post job openings on career sites, job boards, and social networking sites. Interested candidates can often connect directly to an application page that filters applications within the HR software.

Once applications are received, HR software can help mid-sized companies raise hiring standards by facilitating background checks, providing different types of checks, and providing interview tools such as video interviews. Recruitment modules or Applicant Tracking System (ATS) software can be used to filter resumes and applications so that only the best candidates reach these stages, saving time and money.

Benefits Management

As soon as medium-sized companies exceed a certain threshold, usually 50 full-time employees, they must provide certain benefits for employees. Health insurance is a benefit that all companies operating in the United States must offer their employees. States and municipalities may also require companies to provide medical leave, vacation, and other benefits.

HR software can help companies determine benefit needs and then manage and administer these benefits. This eliminates the guesswork of performance management, helping mid-sized companies avoid penalties and ensure a smooth transition to new service offerings. Entering the benefits market can also help attract top talent, and HR software can help communicate these benefits in job postings.

Employee and manager portals

Employee and manager self-service portals may seem unnecessary for small businesses that need to communicate with only a few employees and perhaps one or two managers. However, employee and manager portals can be valuable for mid-sized businesses. Employees can view payroll, benefits and PTO information, submit applications and make changes to personal information. Managers can book schedules, review leave requests and approve changes to information.

Reporting and Data Analysis

Reporting and analysis capabilities can help mid-sized companies identify what works in their HR strategies and what can be changed or improved. These tools make it easy to identify patterns and track metrics that show how different tactics affect areas such as sales, work, and absenteeism. This, in turn, can help promote increased growth and prosperity.

If you’re considering implementing HR software in your mid-sized company but don’t know where to start, we can help.

If you’re looking for an automated Human Resource Management system, we suggest you IceHrm which is one of the best HRIS systems which has so many HR functions automated into one system.

IceHrm is a Human resource management system for small and medium-sized organizations. This HRM software centralizes employee data and allows only one authorized person to access it, providing a high level of security. The presence module monitors employee time based on information about insertion and perforation. It covers all the basic HRM needs of a company such as Time Management, Training, and Development, Attendance Management, Expense management, leave management, Recruitment management and handling employee information.