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

How is HR in small businesses different from large companies?

Upasana Singh
August 22, 2023

Although all Human Resource departments share the same goals of efficient problem solving and plan development, they differ in the paths they take to reach these desired goals. Size, responsibilities, resources, and recruiting methods are actually the main differences between HR in small businesses versus large companies.

Providing Human Resource for small business can mean running a one-person show. Human resources can be a stressful job even when you’re adequately staffed with experienced people, but HR for small business are handled by one person or simply handed off to anyone with an administrative job title.

Those people find themselves responsible for a host of complicated, time-consuming tasks without the training and development, experience, budget, or support that a qualified HR professional—or anyone for that matter—would need to be successful.

In other words, HR in small businesses setting can be a nightmare.

“If I could tell my younger self anything, it would be to persevere.“ - Steve Pritchard, HR Consultant, Checklate

HR in small businesses | peopleHum

Similar goals, different paths

Role of HR in small businesses is primarily different from the role of HR in large companies in terms of size, responsibilities, resources and recruiting. These differences are routinely seen in the presentation and implementation of company policies and procedures throughout companies.

In terms of HR practices, both HR teams ''strive daily to meet the goals that create a path of success…human resources create the partnerships that build the future,'' says Human Resource Affiliates, a leader in HR support services for small and large businesses.

How the HR teams build that future is strikingly different for small businesses and large companies. The two may share similar goals in recruitment, problem-solving, and planning and development, but their pathway to achieving those goals is anything but the same.

It's important to understand these differences as an HR professional, especially if you are earning a human resources degree or are currently looking for a new job in the HR field. Knowing what is expected in a small business compared to a large company can help you determine which field you would like to move into.

With this in mind, here is a closer look at how HR in small businesses differs from HR in large companies.

What is the difference between HR in small businesses and large?

By comparison, HR for large business seems rewarding and fulfilling: larger teams to share the workload, provide mentorship, and offer a sense of camaraderie, bigger budgets to invest in technology, and more support from executives who are learning the valuable role HR plays in building and maintaining the corporate culture.

Of course, HR is never a walk in the park. Being an HR rep in any size organization comes with all kinds of difficulties, from compliance concerns to being seen as “the bad guy” by employees. But Human Resources for small business are compounded by isolation and lack of direction, which makes those challenges even tougher to overcome.

Recruitment and retention are two of the most time-consuming components of an HR department, yet the process varies greatly between small and HR for large businesses. However, small and medium-sized businesses have recently turned to more economical options, such as pre-employment screening platforms, to significantly automate their recruitment process. Large firms, on the other hand, have a tried-and-true recruitment strategy in place. Multiple rounds of interviews, assessment tests, and background and reference checks are frequently required.

Many small business owners and managers must wear multiple hats, especially when it comes to human resources such a Small business HR software. As a result, jobs and responsibilities will frequently overlap. These can include automated recruitment, developing HR budgets or regulations, preparing financial statements, and managing payroll.

However, in a large company, you must perform a more particular position. For example, your responsibilities could be limited to payroll management or employee training.

How can HR for small businesses become more like HR in large businesses?

“Recruiting people or supporting in-house HR activities will often require you to put the company’s interests first and make decisions that are purely good for business. Letting people go and providing tough feedback isn’t a dream-come-true part of the HR professional’s job. But it has to be done. So my advice is to accept the fact that you will be dealing with real humans, different characters and emotions, and you won’t always be able to please everyone.” - Jagoda Wieczorek, HR Manager, Resumelab

A survey between HR and non-HR employees at organizations big and small and asking experienced HR professionals for their advice to those just starting out in HR, confirmed some commonly held beliefs as well as granted some new insights. Some of these takeaways:

1. The most significant difference between the role of HR management small business and the role of HR in large companies is the internal and external perception of capability and positive influence.

2. HR management small businesses can learn a lot about success from bigger, more experienced teams in bigger organizations.

3. A more informed strategy and wise investments in Small business HR software technology could change perceptions of small-business HR for the better.

Some advice for HR in small businesses

First, realize you aren’t alone—there are lots of solo HR practitioners and “accidental” HR administrators out there who are experiencing the same issues in their organizations.

Second, perception is reality. You can make a huge difference and be a priceless business asset for your organization—big HR is proof of that. So, if you think you’re incapable of influencing the direction of your organization because you’re being treated like nothing more than a paper-pusher, you’re wrong! You probably won’t change the negative perception of HR all by yourself. But believing it is a sure way to keep yourself from achieving more.

Third, have a strategic goal. It may sound impossible when you can barely see over the pile of paperwork and the thousand boxes you need to check for benefits, taxes, training compliance, and more, but even one forward-looking report or a simple PTO strategy to ensure coverage can change everything. You’ll feel strategic and your organization will start to see you as strategic—and that leads to buy-in, which leads to more budget, more team members…in other words, success.

Fourth (and maybe foremost), ask for help. There are literally thousands of HR professionals in your state and around the world, and guess what? They’re all about helping people! So reach out, if you haven’t. Go to an HR event in your area. Read blogs and articles they’ve written…and read our blogs because we love you and we want to help!

HR in small business requires you to be patient and kind to yourself—you will have good days and not-so-good days, just like any job. In HR, we expend a lot of energy and emotion in the work we do. Don’t lose the passion for what you do. Pick yourself up, dust yourself off, rely on your trusted peers to help you through the tough times, and celebrate the good times. And remember that you make a difference for the organization and for the employees.

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