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What does an HR department look like in a small business?

If you employ people, you may need an HR role or small department to manage hiring, firing and more. Picture Shutterstock
If you employ people, you may need an HR role or small department to manage hiring, firing and more. Picture Shutterstock

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Running a small business can be a one-way ticket to success, financial freedom and wealth. The great thing about running a business is that your earning potential is tied to how well the business performs, and if the business is good, this sure beats a set salary per year. You also get the freedom to be your own boss, set your own hours and call the shots. For those who struggle with reporting to a manager or supervisor, this type of employment can be the way to go.

Furthermore, if your business scales up well enough, you may be in the position to employ staff to perform duties for you. This can mean further growth as the staff drive the business for you while you can focus on more high-level tasks like strategy, marketing, admin and more. But if you employ people, you may need an HR role or small department to manage hiring, firing and more. But what exactly does an HR department look like in a small business? This helpful article will explain precisely this, so continue reading to learn more.

HR staff are qualified

In most cases, an HR Manager or team within a small business will all have a Master's in Human Resources as a qualification. This postgraduate degree enables them to perform all types of HR duties. They will have learned all about human resource management in a business context, including best practices and policies for recruitment, retention, staff well-being, performance management, contracts and more. It's safe to assume that most HR department staff in a small business have this qualification or are actively working towards it.

HR manages recruitment

When your small business gets to a specific size, you can't avoid the need to bring on more staff. Depending on the type of work that you do, these roles will perform a variety of functions. For instance, if you run an e-commerce business, you'll need pick-pack staff to fulfil orders for you, including packing and sending goods out to customers. If you deliver services, you'll need administrator roles to book jobs, send quotes and invoices and schedule the service delivery staff for jobs. You'll also need payroll staff to ensure your team is paid on time and a variety of other roles, especially if you grow quickly.

An HR department in a small business can manage all aspects of recruitment for you. They can create job listings that are published on all the job sites, such as SEEK, Jora and Indeed. Once candidates apply, they can screen and shortlist the cream of the crop for you. They can also hold interviews, which you, as the business owner, may attend as a panel member, or you can leave it to the trusted HR professionals. If a candidate becomes preferred for a role, they can onboard the new team member, including generating a contract, negotiating their salary, and arranging their induction to the business.

This is quite an undertaking and can take three weeks to a month on average per role or longer, allowing time for the entire process. Having a dedicated department to manage this can relieve the burden on busy small business owners. And one thing that a small business HR department will utilise is technology platforms to reduce the burden of recruitment. A small business might invest in a software suite that can automate the recruitment process, including advertising, onboarding and candidate applications. This can allow a small HR department to function effectively and efficiently.

Performance management

On the other side of the human resource remit is performance management. Unfortunately, the fact that people need to perform roles in a small business leaves room for human error, accidents, poor performance and sometimes gross misconduct. People can do all sorts of things at work, including but not limited to slacking off, working other jobs while on the clock, not hitting targets and misbehaving.

If required, an HR department can implement performance management plans for staff who aren't living up to their end of the deal. Often, this will motivate staff to perform better and improve their conduct at work, but in some cases, they can't meet the goals of the performance management plan, which leads to our next point.

Staff retention

This can be a struggle for a small business, as retaining staff can be challenging as people want to move to more prominent companies for more opportunities or better pay. A small business's success can be dependent on its staff, and this is where the HR department comes in. A small team in a small business can add a personal touch, get to know staff, and develop strategies to retain them, including promoting well-being, developing workplace perks, and actively working to keep staff engaged and happy at work.


An HR department in a small business is also responsible for staff terminations or ending employment. This can occur for a few reasons. One is that a staff member resigns from their position, to take a new job, retire or have a break from working. This is pretty straightforward. However, suppose a staff member has failed a performance management plan, has behaved poorly, or has otherwise rendered their employment untenable within a small business.

In that case, the HR team can fire them. They need to do this in accordance with relevant employment legislation and guidelines for which they are employed to be across. They can ensure that if a staff member is terminated for this reason, the business has kept their side of the street clean, so the impacted person can't file for wrongful dismissal.

A HR Staff Summary

This informative article has shared what a HR department looks like in a small business and the various roles and duties they will perform to hire, retain, and terminate staff.