How is HR in Small Businesses Different from Large Companies?

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

Similar Goals, Different Paths

HR for small businesses and HR for large companies are primarily different in terms of size, responsibilities, resources and recruiting. These differences are routinely seen in the presentation and implementation of 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 HR 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 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.

Small Business

Size, Responsibilities, Resources and Recruiting

HR managers and their teams are responsible for effectively planning and developing solutions for their company to meet its objectives through the people it employs. This is one of the primary roles of HR whether in a small business or a large company. With this mindset, it's important for HR departments to recognize that employees should be molded and encouraged to work in a way that will manage and support the goals of the company. In order to accomplish this, small businesses have to realize that their size, responsibilities, resources and recruiting methods are different from that of a larger company. Achieving the HR mission of a small business requires a distinct approach.


Company size is the obvious difference between a small business and a large company. From office space and number of employees to number of customers and production levels, everything about a small business is just that - small. The HR department within a small business is no different. A typical small business may have anywhere from 1 to 5 employees. Working as an HR professional in a small business most likely means you will be handling other roles besides HR.

Business writer David Ingram notes that large companies tend to have a lot of management layers while small businesses are primarily flat. Larger companies have more employees available to fulfill a variety of roles on all levels, including management. Smaller businesses simply don't have that number of employees at their disposal. While larger companies may have an HR manager overseeing HR assistants with day-to-day tasks, a small business has one HR individual to operate as manager, assistant, recruiter, and all-in-one professional. ''Because of this,'' Ingram writes, ''employees on the front line are generally responsible for a wider range of work tasks than employees with similar job titles in larger businesses.'' This leads to our second difference between small and large businesses - responsibilities.


With a small business comes a small number of employees. Roles and responsibilities often overlap in order to get the job done. For instance, you may serve as the HR manager as well as the administrative assistant to the executive director. Or you may serve as the HR manager and bookkeeper. ''HR units of smaller organizations are sometimes forced to play a more reactive role due to constraints of its smaller team size or in many cases, a one-man operation,'' shares business management expert Maggie Kerrin. In other words, not only are you working two positions in the company, but your role as HR manager includes literally all HR tasks, including payroll, benefits administration, staffing as well as organizational growth planning and development.

In contrast, larger companies tend to set aside an entire department to handle HR tasks, freeing up entire floors to focus on other roles. With a whole department devoted to working on payroll, employee benefits, policies, procedures and development, there is no single person trying to handle everything at one time. Each area of work tends to have an expert in the lead. Support is key, and large companies have it from within. Working within a large company will definitely give you the advantage of having assistance and back up coming from all directions. Overall, it may give you a lighter workload because you're not trying to carry everything on your own.



Resource availability is another difference between small businesses and large companies. It's obvious that small businesses just don't bring in the same kind of income large companies do. Because of this, there is a limit to what the HR department can do in terms of employee training, team building, and policy and procedure development. This doesn't mean that small businesses ignore these key areas in HR operations, but it does mean they have to approach these areas differently.

If you move into an HR position within a small business, be prepared to get creative when it comes to extended programs to build up employees and encourage growth within. For example, one way to develop the business and boost employee morale is to bring in mentors to walk alongside the company. Mentors are professionals in the field who come in at low cost or on a volunteer basis to give advice to employees on running the business and increasing revenue. HR Affiliates notes that ''mentoring activities for upward mobility are strong in small businesses focused on growth.'' Mentoring has become a creative and effectively popular way to boost morale within a business and to encourage growth for the business and its employees. Mentoring is also more cost effective than full-day conferences or team-building retreats.


Recruiting, or the hiring of employees, is accomplished differently as well. Employee hiring is a major time and money cost for small businesses. While larger companies have funds allotted for background checks, multiple interviews, etc., small businesses simply make do by running searches on social media, checking references and then bringing in the potential employee for a final interview. ''Budgetary and time constraints limit recruitment efforts,'' says Kerrin. ''Internal job posting is a popular method used for mid-level and higher positions.'' Smaller recruiting methods such as advertising in newspapers, posting job openings on social media and LinkedIn as well as the use of employee referrals are often the main recruitment efforts small businesses have time and money for. Employees are usually a major cost center, and turnover can adversely affect profits as well as the company's reputation. The impact of these issues is much greater for a small business.

Differences Can Mean a Positive Advantage

Although it may sound like small businesses are at a disadvantage with it comes to size, responsibilities, resources and recruiting, there are actually many positive sides to working in HR for a small business. Smaller size often sets small businesses free from mandatory laws and regulations that large companies must adhere to. For instance, if there are not enough employees or hours in the day to effectively carry out the duties of the HR manager, then an HR firm could be hired to handle all of the legalities and take the stress off the already loaded shoulders of small business employees.

Likewise, when it comes to providing enticing employee benefits, a small business may not have the budget to offer high salaries or large retirement plans, but because of its small nature and limited number of employees, other benefits can easily be introduced. For instance, a more relaxed dress code, flexible scheduling, and a laid-back, stress free workplace environment can be offered. As mentioned earlier, mentoring programs are very enticing to some of today's younger applicants as well.

Small or Large Company?

Small Business or Large Company?

Working in a large company may give you the cushion you desire as an HR manager. Meaning, if you want to work within a large team with plenty of backup and support, then a large company atmosphere may be for you. But if you're ready for a challenge and looking for ways to get your hands dirty and be creative, then opt for a role within a small business. There's not only room for change, but there's room for growth in a more casual, relaxed, laid back, and less time-constrained environment. Take your time reading through your options and see which one is best for you. The HR goals and roles are generally the same; it's the way they're carried out that makes the difference.

By Amanda Johnson
September 2017
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