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What is Human Resources? A Simple Guide For Small Businesses

what is human resources
Rebecca Riserbato

Does your small business take a strategic approach to human resources? If you're like most other home services business owners, the answer is probably no. We want to help you change that.

This article will answer the question, "What is human resources?" Then we'll explain why it's important and teach you how to win with HR for small businesses.

Let's dive in!

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What is Human Resources?

Human resources, often abbreviated to HR, refers to the company department responsible for managing employees and employee-related matters.

As such, human resources professionals are often asked to recruit and train new team members, run payroll, administer employee benefits programs, help settle staff-oriented disputes, and even fire workers when necessary.

Why is Human Resources Important?

Now that we know what human resources is let's talk about why it's important.

Most small businesses have limited resources. Think about your home services operation. It's probably just you and a handful of employees, right? Even if you've grown your business into something more substantial, with 100 vans, we're guessing you don't manage an enterprise-level company.

Without a pile of cash in the bank, you have to be extremely careful about spending your money. Since HR isn't directly related to your work, it's easy to dismiss it and funnel resources to marketing, sales, and other revenue-generating activities.

But here's the truth: HR for small businesses is extremely important because it leads to:

  • Better Employees: Hiring is tricky. Get it wrong, and your company will struggle to serve its customers. Get it right, though, and your business will grow. HR can help you fill crucial roles on your team to achieve your goals.
  • Engaged Employees: Without your team, you can't run your business. HR keeps employees satisfied and motivated in their roles. This allows staffers to achieve peak performance more often and deliver better results for your company.
  • Safe Employees: There's a reason why employee-related laws exist. Many of them help keep workers safe. HR reps understand these laws and will make sure your business complies with them, helping you avoid penalties and lawsuits in the process.

Make sense? Great! Let's discuss how to build an HR department for your home services business. All you have to do is follow the four-step strategy in the next section.

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HR For Small Business: A 4-Step Strategy

Many small business owners handle human resources tasks themselves. We understand. You can save a lot of money this way. Until you can't...

Once a company hits the 10-employee mark or so, its owner is better off delegating human resources duties. Why? Because this is when the demands of HR generally start to overwhelm them and prevent them from accomplishing other, business-boosting tasks.

Sound familiar? Then use the four-step strategy below to build an effective HR department for your home services business. You'll be glad you did-guaranteed!

HR for small business meeting

1. Decide to Delegate

The first step is deciding to delegate HR tasks to another professional.

As mentioned above, this usually happens when a company hires employee number 10. But this isn't a hard and fast rule. You can also build out your HR department before or after this milestone. Whatever you decide is right for your business, keep these things in mind:

Delegate HR tasks when they prevent you from doing your most important work.

Have you had to turn down jobs because managing your employees takes up too much of your time? Is the quality of your work suffering because you're stressed about an employee dispute? These are signs that you need to offload HR duties.

Delegate HR tasks when you can't build an engaging workplace on your own.

The best HR professionals do more than run payroll and manage employee benefits programs. They help build a company culture that people want to be a part of. Your small business will become more profitable when it begins to attract and retain top talent - an extremely important task with the ongoing tech shortage in home services.

Delegate HR tasks when you're ready to streamline the hiring process.

Your employees are the engine that makes your small business go. Unfortunately, finding the right employees is often difficult-especially without a standardized hiring process. Your HR team will ensure new workers are recruited, vetted, hired, and onboarded efficiently.

2. Find the Right Person

Once you've decided to delegate HR tasks, you need to choose someone to delegate them to. You have three options: delegate to someone you already employ, delegate to someone you plan to hire, or delegate to an outside agency and/or contract worker.

Delegating HR tasks to someone you already employ.

This is the option that most small business owners choose. Unfortunately, it's rarely the right move. Why? Because your current employees already have jobs. Asking them to complete HR tasks on top of their regular duties is a recipe for stress and burnout.

Also, in all likelihood, the person you choose for this job will not have HR training and experience, which means they probably won't be able to excel in this area.

That said, this option can work as long as you choose an employee who is excited to take on this role, is an organized person and is naturally empathetic.

Delegating HR tasks to someone you plan to hire.

If you really want to get human resources right, look to hire a qualified professional to handle every HR-related task for your small business.

The right person will have HR training and, hopefully, experience in the field, though this definitely isn't a requirement. A recent college graduate, for example, who has a degree in human resources can be an excellent choice for your newly formed HR department.

Just remember, a new employee will cost your company money. Make sure you can pay them a competitive salary, benefits package, etc., if you choose this option.

Delegating HR tasks to an outside agency and/or contract worker.

Lastly, you can delegate HR tasks to someone outside of your company.

This is a great option for businesses that want to outsource HR tasks without taking the plunge and hiring another full-time employee.

One of the best things about this option is the flexibility it will afford you. For instance, you could decide only to outsource a few HR tasks and do the rest yourself. This will save you money and allow you to maintain greater control over your HR department.

Outsourcing HR tasks is generally cheaper than hiring a human resources management in-house team to complete them. But you won't benefit from the culture-building aspects that an in-house HR rep can bring.

3. Invest in HR Training

Once you hire someone to help you with human resource tasks, you need to invest in their development-even if they've held an HR role before and have the required training.

Fortunately, there are a lot of resources available to you, including:

  • State-Run Courses and Technical Assistance: You may be able to train your HR employees via state-run educational materials. Check your state for options.
  • Society For Human Resources Management: This organization, better known as SHRM, has tons of HR training available, as well as a certification program.
  • Social Media Groups and Forums: Your HR team can learn a lot by associating with other human resources professionals on sites like Facebook and LinkedIn.

To succeed in HR, one has to excel at conflict resolution, have a high degree of emotional intelligence, and look at issues from multiple perspectives. These aren't HR-specific skills, so there are plenty of other online resources to help HR reps.

There isn't a one-size-fits-all approach to HR training. As long as you support your human resources management and regularly provide them with educational materials, you should be good.

4. Prepare For the Future

Finally, just because you hire an HR manager today doesn't mean you can forget about your human resources department from here on out.

As a small business owner, you need to check in with your HR team regularly and provide them with the necessary resources they'll need to grow with the rest of your company. For example, if you hire 10 workers in 2022, you'll probably need to hire another HR rep.

We should also mention that, while outsourcing HR responsibilities can be beneficial in the short-term, it's not always a long-term solution for growing businesses.

Most experts agree that when your company reaches the 75 employee mark, you'll need to hire a full-time HR professional who has both training and experience in the field. If you don't hire this person, you'll have a difficult time effectively managing your employees.

HR For Your Home Services Businesses

HR for small business is important-even though most small business owners often overlook it. We encourage you to put serious thought ininto your company's HR approach.

If these kinds of tasks are eating up your workday, consider delegating them. You'll love the extra time you have to work on other business-boosting activities. Just make sure you choose the right person to delegate to, and you should be golden.