No matter how big or small an organisation is the employees that are hired and managed form the foundation of its ongoing and/or future success. Most small and medium sized businesses often do not realise the importance of having a solid Human Resource function in place. This is primarily because they are unaware of the specific employee-related challenges that emerge with time.

Experts at believe that a proper HR function with streamlined policies and processes can benefit all businesses – even if they’re employing just three to seven people at a time. This brings us to the more important chunk of this discussion, which is how does an HR Function benefit organisations, particularly those falling in the SME category. Let’s find out about that.

It Helps Hire the Right People

For small and medium businesses where the money is usually tight, it is extremely important to hire the right person. If you’re paying someone, it might as well be for good worth. The lack of an HR function results in panic hiring – where there is work piling up and you need just about anyone to get that through. This sometimes brings in the wrong people who are inefficient, unproductive, and trouble makers. The thing is that there will always be a lot of people that match the skill set you require but not all of them would make a good cultural fit for your organisation. The HR can help filter the best candidates for you in that aspect.

It Manages Employee Performances

Even after you have hired a person that seems to be a good fit in the organisation, your job doesn’t end there. In fact, it has only begun. You need to constantly evaluate whether the people you have recruited are performing to the best of their abilities. Then there are factors like employee motivation, training and development that need to be initiated in order to keep the employees on track with their growth prospects. For a small business owner, if you have to take care of all this, who will take care of the more important aspects of the business – like planned expansion and growth? This makes HR in small businesses an important business function.

It Fosters Employee Loyalty

We’re all aware of the fact the star employees are hard to find. Organisations literally get lucky when they come across one. These are employees that everyone wants – exceptional skills, great work ethic, highly productive, self motivated, team players – the only problem is that they know their worth too well. And since everyone wants them, it is extremely difficult to retain them in the organisation. Things however, are different when you have a full-fledged HR department working on ensuring your star employees have all the job satisfaction they need in terms of growth, compensation, recognition, and job description. This is how you keep your best employees with you for a longer time.

It is true that hiring a separate HR function for the organisation is costly, but there are other alternatives to an in-house HR function that you need to consider.

An HR function is an integral part of an organisation – size here, does not matter. What matters is the fact that this important element of business can help you efficiently manage your employees and even retain them for longer.