Management of Human Resources in Small Businesses

Management of Human Resources in Small Businesses

Managing the most important asset for the business, people! While meeting their requirements and complying with local, federal and state laws and regulations; that is the fundamental function of Human Resources (HR) in small businesses. Not a small thing! Let's talk about HR management.

When you start a venture, an individual company or sole proprietorship, human resources management might seem easy, however, as staff is hired and the business grows, things get complicated, the legal and operational requirements of Human Resources increase and those basic tasks soon become real headaches.

In general, we talk about all payroll, benefits, hiring, terms and a solvency status with the many fiscal and legal procedures both at local, state and federal levels. Perhaps, the main problem with basic HUMAN RESOURCES management in small businesses is that it is not "so basic".

Just keeping up with government regulations involves a series of time- and effort-consuming paperwork, forms, payments, and records; without setting aside the basic purpose of HR management, which is the motivation and commitment of the personnel that moves the business forward. shows that small businesses and ventures do not have the staff or budget to handle timely all the essential details of Human Resources;  fortunately you can find support in comprehensive and truly accessible tools.

Recommended reading: Business Consulting, a model based on comprehensive solutions

Basic HR functions in small businesses

The Small Business Administration (SBA) recognizes the core functions of human resources management (HRM), which broadly speaking involve the following:

  • Recruitment, hiring and termination of employment
  • Formation and development of all human capital
  • All the procedures inherent to payroll and benefits
  • The retention of employees and attention to their requirements
  • Creation of a safe and healthy work environment
  • Organizational climate and communication throughout the organization
  • Compliance with laws, regulations and formalities in this regard.

Ensuring that all of these functions and procedures comply with legal formalities and updates is an "arduous task" and it may require specialized resources. Any error due to ignorance or non-compliance can be costly in terms of fines and penalties.

Human Resources Formalities for Small Businesses

Among the minimum HR formalities in every company, regardless of its size, legal structure and business model, is the creation and maintenance of an employee handbook, a document that allows employees to know what is expected of them in terms of conduct, responsibilities, commitment and performance.

In addition, the area or individual in charge of human capital management must maintain an  employee record that includes at least:

  • The I-9 Form  or Employment Eligibility Verification
  • Medical reports
  • Forms of evaluation before recruitment and hiring.
  • Proof of onboarding to the position and formation.
  • Form W-4 and other IRS forms.
  • Support documents of continued service within the company and termination.
  • Payroll management.

In addition, the person or group responsible for HR management should be familiar with a range of federal laws and their state counterparts, including:

  • Anti-Discrimination (ADA- AEDA)
  • Fair Labor Standards (FLSA)
  • Family and Medical Leave (FMLA)
  • Accessible Medical Care (ACA)
  • Immigration and Nationality Acts (INA), Illegal Immigration Reform, Immigration Control and Reform (IRCA) and Immigrant Responsibility (IIRIRA) Laws.
  • Benefits laws.
  • Occupational Safety and Health Act (OSHA).
  • In some cases, union laws (NLRA).

The Department of Labor (DOL) requires the publication of posters or information posters (Workplace Posters) about these and other needs inherent to human capital management.


HR in small businesses – a real challenge

In addition to the arduous and delicate nature of HR management, the lack of experience, the risks and costs of incorrect decisions and the lack of resources to verify that HR functions are carried out appropriately, add up the potential problems of outsourcing the basic functions of Human Resources.

Many organizations such as the Professional Employer Organization (PEO) or Business Process Outsourcing  (BPO) could offer expensive "standard solutions" or "generic packages" that do not fit the specific needs of the business model, philosophy, culture, and organizational climate of the company.

Are there any comprehensive and really accessible solutions out there? Of course there are.

HR ToolBox by GBS Group

A solution for Human Resources management really within reach of your budget, comprehensive and easy to use, especially designed for SMEs, startups and entrepreneurships.

With HR ToolBox by GBS Group, you will have at your fingertips a tool capable of guiding you in the preparation of manuals, consultation of laws, preparation of forms and an online management tool center that provides regulatory compliance and better results with lower costs.

HR ToolBox by GBS Group will guide you in building the employee manual, with information about the organizational culture, organizational chart, positions, functions, code of conduct, benefits and more.

You will have timely and immediate access to a database of more than 500 templates, forms and online procedures such as: Manuals, posters, spreadsheets, checklists, work history, I-9 Form, recruitment checks, job requirements, qualities and functions...

It tracks and evaluates your employees' performance, and it makes salary comparisons based on current best practices and trends. You can find out about HR state regulations and laws and compare them to federal standards and individual states.

Everything and much more in a single tool and within reach in a couple of clicks. Do you want to know more about the main modules of  HR ToolBox  by GBS Group? And learn about our affordable rates.

We are GBS Group, a professional, multidisciplinary team with decades of experience and endorsements like the status of enrolled agent before the IRS.

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