Human resources (HR) has gotten a bad reputation these days, as being a place where the company and it’s interests are protected more than the people who work for it. It’s a place that screens applications finding reasons not to hire people these days, rather than being a way to develop and build the human capital that powers a company to greater heights. As small business owners, we might think that we don’t have a HR department. In fact, we may think that we don’t need an HR department. If we are a sole-proprietorship where it’s just the proverbial “me, myself, and I”, then there won’t be any disciplinary issues, any hiring or firing decisions, or anything that a HR department traditionally does.

However, that really isn’t the case. Small businesses do have HR departments, though like most other “departments” within the company it’s all rolled into the duties of the owner, sole-proprietor. So what does a small business HR department do?

• Going back to the original meaning of the words (not the trumped up, MBA meaning), it’s “human resources”. In other words, it’s how you as the owner relate to others and what resources you bring, or don’t bring, to your company.
• You do hire, or fire, vendors, service providers or others with whom you work.
• You do work at developing your human capital (you) as you learn more about your business or aspects of your industry

Let’s start with the last one, because it’s the easiest. Looking at HR as a department taxed with the job of developing employees, every time you learn about an aspect of your business (read a trade journal for example), you are developing your human capital — you! Learning about websites or new technologies falls under this category, too. There’s a lot of education that goes into running a business by yourself. You can keep going along as you’re going along, but things change so often that’s it is always good to learn.

Hiring and firing vendors is HR’s job, too. Website not running right? Need to fire your tech support and find a new one? That’s a personnel decision for your “HR department”. Researching new web site hosting companies or a new wholesale vendor to add or improve existing product lines falls here, too.  You may not realize it, but you make these kinds of decisions all the time. Changing advertising outlets, trying new media outreach, it’s all HR, even if it’s something you do as part of your normal business.

And, finally, going back to the root of the two words: human = people and resource = a source of supply or support, a natural source of wealth or revenue, an ability to meet and handle a situation. (Definition for resource provided by the Merriam-Webster dictionary). The root of this is, what company do you keep and how do you treat people you deal with.

“an ability to meet and handle a situation”

I think it’s easy to say that we encounter “situations” all the time in the course of our doing business. Angry customers, vendors who don’t deliver on time, competitors who try to tear us down. I think we’d all agree that those are “situations”. How we deal with those is exactly what human resources is about. Do we portray ourselves as a source of supply or support, a natural source of wealth or revenue, or do we tumble down the slippery slope of negativity and recriminations?

In all the ways that the single person business has to act as all the departments in a company, in some ways, how sole-proprietors handle their human resources is the most important.