Why Is HR Important for Businesses and Startups?

As companies grow, their need for human resources becomes more apparent. But when you’re just starting out, do you need an HR department?

The simple answer is ‘No, you don’t need a whole department. But you will need some HR services to help you manage your day-to-day operations.

Many business owners limit HR responsibilities to payroll and recruitment. HR plays a big role in both.

But we cannot limit the role of an HR team or even HR consultants to recruitment and payroll.

In this article, we’ll be looking at why HR is important for businesses and startups. We’ll also discuss the top HR services your company needs and see why it may be better to work with an HR agency. 

What does HR do? 

HR is a team or group of people who manage various business operations between employees, managers, and a company’s founders, top management, or board.

Most business owners believe they need HR professionals or consultants when

• Seeking new employees
• Managing payroll
• Determining employee benefits
• Paying employees

However, there is much more to HR than those roles. The bigger the company, the more roles they have to perform and the bigger an HR team is needed.

The 5 main HR categories 

When you think about HR, there are 4 or 5 main functions or categories to look at.

Often referred to as the 4Ps of HR, these functions are: people, pay, process, and promotion.

However, within organizations, they’re known as:

• Recruitment and selection: This includes everything from creating job descriptions and managing the hiring process to onboarding.
   
• Compensation and benefits: This covers everything related to compensation, paying employees, rewards, benefits, annual vacations…etc.
   
• Training and development: Sometimes referred to as learning and development (L&D) or performance management, this HR function focuses on upskilling employees within an organization. It could be through internal trainings or external workshops and courses.
   
• Organization development (OD): The Association of Talent Development (ATD) defines OD as “an ongoing systematic, long-range process of driving organizational effectiveness, solving problems, and improving organizational performance.” It’s about improving the performance of the entire company.
   
• People management: This discipline, sometimes referred to as people and culture management, involves managing employee relations, employee engagement and empowerment, retention, among others. People management contributes to recruitment and organizational development.

Under each of these broad HR functions and categories, there are a variety of tasks, procedures, and requirements. As you can see, these functions aren’t independent but affect one another in many ways.

For example, people management may involve creating an employee rewards program. However, a people management executive will need to collaborate with other HR professionals to include the rewards program within the company’s compensation and benefits scheme, identify engagement targets, and determine rewards.

So, why is HR important for businesses? 

HR professionals perform various roles that serve employees, management, and the business as a whole. While some of these roles may not be tangible, they impact your business and employees.

For example, HR managers and teams are tasked with conflict resolution. Conflicts may arise between team members, employees of different teams, managers, employees and their managers, among others.

It’s the HR team’s role to resolve these conflicts and find the best possible outcomes.

Resolving conflicts amicably can result in employees being confident that they will not be unfairly treated, prompting them to stay longer with an organization.

Here’s a quick breakdown of what a human resources team may do at a company: 

• Create an inclusive compensation and benefits strategy.
• Manage employee relations and resolve conflicts.
• Conduct and manage training and development programs.
• Manage the recruitment cycle, from job descriptions to finding suitable hires.
• Manage time off, absences, leaves, and payroll.
• Conduct resume background checks for job applicants.
• Create the company’s pay structure and ensure fair compensation across teams.
• Handle legal issues that may arise.
• Ensure compliance with labor laws.
• Manage situations of harassment.
• Create HR policies and the employee handbook.
• Conduct or support managers in conducting employee performance appraisals
• Create a positive work culture.
• Offer onboarding and orientation to new team members.
• Increase employee retention and loyalty.
• Reduce mistakes employers make to reduce employee turnover.
• Review salary surveys to ensure your company offers fair pay and compensation.
• Support the business and marketing team in employer branding initiatives.
• Collaborate with other teams for recruitment marketing.
• Support management in promoting employees and finding leaders.
• Develop and update the company’s HR strategy.
• Keep up with HR industry trends to ensure the company is up-to-date and maintaining best practices.

Most-time consuming HR services 

As you can see, HR teams have a lot on their plate.

While not all companies will need all these HR services when they start out, as the company grows, so will its needs. Additionally, it may not be feasible, or doable, to perform all HR functions in-house.

Some functions like creating an HR strategy are time-consuming. That’s why some companies don’t spend time on them. However, their business will suffer for it.

Alternatively, companies and startups can turn to HR consultancies and agencies, like Tawzef, to perform these time-consuming tasks on their behalf and drive their business forward.

Here are some of the most time-consuming HR functions and services companies often struggle to perform in-house: 

• Creating, developing, and updating the company’s HR strategy
• Creating a business development strategy
• Business process outsourcing (BPO)
• Creating an employee rewards and recognition program
• Conduct a GAP analysis

There are other services that companies prefer to hire HR agencies to perform, even if they’re not time-consuming. These services or needs are a hassle for employers but not for HR companies:

• Payroll management: A tedious task, that takes place at the end of each month. In-house recruiters often don’t have the capacity to take on monthly payroll. 
   
• Paying employees: Factoring in payroll, early leaves, absences, maternity or sick leave, along with taxes, among others, and then making money transfers to employees’ bank accounts is a long process. That’s why companies often choose to hire agencies for payroll and manpower outsourcing services.
   
• Performance appraisal system: To start evaluating employee performance, you first need to create a performance appraisal system for the company and the different departments. This process requires an evaluation of the business, employee job descriptions versus their actual duties…etc.

Why work with an HR agency like Tawzef?

With so many HR functions to perform, it’s no surprise that your one-person HR team is stretched thin. Turning to recruitment and HR agencies like Tawzef can help you in many ways.

HR agencies can help you to:

Increase profitability 

One of the top reasons companies to HR consultancies is to help them grow and increase their revenues and profits.

HR firms help companies focus on their core business operations and take away the hassles of recruitment, OD, among others.

Different HR agencies have different offerings. However, companies like Tawzef help clients with recruitment, while offering payroll and manpower outsourcing services so clients don’t have to worry about managing payroll or processing payments.

Provide training opportunities

HR companies can review your company’s needs and identify the training needed for each team or department.

Tawzef helps you identify your needs and set relevant training and development KPIs. This helps you measure the impact of your training on your teams.

Save time and money 

Tawzef helps you create and manage HR budgets. In addition, they help you save time and money across various HR functions, while providing decades of expertise.

Improve productivity 

By taking away the various hassles of HR and people management, your teams are better equipped to focus on their jobs and be more productive.

Conclusion

As you can see, the HR department is an integral part of any business. Their work may not be tangible but they can be the reason your company grows and retains talented employees for years, or their absence may result in a high employee turnover.

Working with an HR agency can help you overcome various HR challenges, while helping your business grow and ensuring your employees stay productive.

Learn more about how an experienced HR service provider like Tawzef can help you grow. Get in touch today!