The Differences Between HR in Small Businesses and Large Companies

By Nicole Carter | January 5, 2022 | Strategic Planning Resources

HR is an essential function in any organization. Yet, the processes, procedures and approaches involved can differ drastically depending on whether you are working within a small business or a large corporation. This article will explore a few of the differences between HR in a small business setting versus HR in a more robust large corporate setting.

1. The Level of Resources

One of the most noticeable differences you’ll see is the level of dedicated HR resources. Naturally, small businesses will have a limited amount of employees. This also includes a smaller, or non-existent, HR team. The HR practitioner for a small business might spend most of their time on general administrative tasks such as filing and data entry, in addition to having another full-time job. Although there will be challenging people issues that crop up from time to time, the majority of their time will be spent on various responsibilities outside of attempting to proactively resolve people’s problems. If the company is especially small, the founder or founders will often be the HR person until there is the ability to hire a full-time person. As an alternative, small business owners may opt to hire an HR Consultant on an “as needed” basis.

In addition, expensive HR systems that help to manage tracking of employee data, compensation, benefits, performance, training and attendance can be out of reach. This means that HR representatives will have to get creative to fulfill their responsibilities manually.

2. The Recruitment and Retention Process

Although there are many similarities between large corporations and small businesses in the recruitment process, it’s much more critical for a small business to get it right. Since they may not have a lot of resources available, they need to find the best candidates possible with the limited time they have. More often, you’ll see smaller businesses be more flexible and innovative in their recruitment process, trying different recruitment methods depending upon the vacancy. To keep costs down, for example, they might seek employee referrals to avoid the high cost of using job boards and pre-employment assessment platforms that help automate the process.

Large businesses, on the other hand, will typically have a more formalized recruitment process, which involves multiple methods of posting and levels of interviews, as well as comprehensive background and reference checks. Since they have more talent within the organization and likely more layers, they might also opt to post jobs internally.

3. The Level of Responsibility

The smaller the organization, the smaller the HR team. There might only be one HR professional in a small organization. In that case, the HR role takes on a more operational, generalist focus. As an example, the HR practitioner will often be responsible for hiring, payroll, workplace safety, training and development, etc. In comparison, large organizations have the ability to employ more dedicated HR resources. With more resources available it is possible to spread the work and take time to support the business in more strategic ways. Opportunities also exist for specialization in one targeted area of HR, such as training and development, or diversity, equity and inclusion.

HR is an essential function in any organization. Yet, the process and procedures involved can be drastically different depending on whether you’re working for a small business or a large corporation.

If you’re a small business that doesn’t have the resources to hire a full-time HR professional but wants guidance on the HR policies and procedures, you can use HR Factor’s on-demand services for small businesses.


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