What Small Companies Really Need from HR

Psst… curious about what senior leaders want from HR? Check out this post.

Large and In Charge: The Strategic Role of HR at Small Companies and Non-Profits

With the buzz around talent management, organizational development, and management circles, the role of HR is becoming more sophisticated in larger organizations . But, in smaller companies and non-profits, HR professionals often still fill more traditional roles in areas like recruitment, benefits, payroll, and evaluation processes – not to mention being the on-staff therapist. It’s time for small organization HR professionals to dig out from under the heavy lifting and get into more strategic positions in the company. The company needs them to do so, and here is why.

Top Three Advantages of a More Strategic Role for HR

1. HR becomes a contributor, not just a cost, to the organization.

When HR professionals take on a more proactive role in the organization, there is a return on HR expenditures made and HR becomes a group to invite to the table.

Talent Management: It’s not just recruitment, but a holistic system that stems from the organization’s mission, values, and business plan. Talent management includes workforce planning, sourcing candidates, orientation, performance, compensation, succession planning, and more. Talent management is putting the right people with the right skills in the right positions, and it pays for itself.

Performance Management: It’s not just the annual evaluation, but a full cycle that flows from the organization’s mission and values and into goal-setting and monitoring, performance evaluation, professional development, and rewarding good performance. By aligning individual objectives with business objectives, performance management creates a direct line to achieving organizational and business goals.

Compensation Management: It’s not just processing payroll, but developing a philosophy, strategy and structure for compensation that emerge from the organization’s mission, values, and business plan. It connects to both talent and performance management.

2. HR is more intentional about the largest cost center, compensation.

While the cost of payroll won’t go away, when HR plays a more strategic role in the organization, you are able to analyze the compensation trends and spend money more wisely.

Compensation Philosophy: Determine how you define your market, how competitive you want to be relative to the market, and what types of performance you want to reward. Every dollar matters.

Base Pay Structure: In many smaller companies, employees are paid at the supervisor’s whim; inconsistencies are perpetuated through salary adjustment and promotion cycles. If compensation data is sought or reviewed it is often modified to suit the person in the position rather than relating directly to the work itself. Creating a base pay structure ensures that people aren’t grossly over or underpaid for their work and contributes to internal fairness across positions.

Total Rewards Program: What are other ways you already compensate staff that they may or may not be aware of? Share this information annually with your employees on total rewards reports. Have you considered an incentive plan for key positions? Blended compensation programs that include pay for performance are gaining in momentum .

3. HR staff can do engaging projects.

Employee engagement isn’t just for the rest of staff, HR professionals deserve to be engaged in their work, too. HR professionals who take on a more strategic role are able to dig out from the mountain of paper- or computer-work – to do more interesting and engaging projects, including organizational development projects, professional development programs, work flow analysis, or any number of fun projects.

By taking on a more strategic role in your small company or non-profit, not only do you have the opportunity to increase the status of HR in your organization, you can really help your organization leap forward – clearing the path for growth, more strategic use of resources and an engaged HR staff.


Mykkah Herner
Compensation Consultant
PayScale, Inc.

Related Reading:

Hero or Zero? How to Get the Most from HR.

Why you really really need HR

It’s Time to Hire an HR Professional

Check out these related posts