People as Assets (HR Assets)
People are one of the most important assets for any company. It’s not just about headcount, but about their knowledge, skills, experience, and the roles that keep the business running.
Why are people key assets for small and mid-sized businesses?
- Employees carry critical know-how, especially in smaller companies that rely on key people.
- Every company has critical roles (e.g., IT administrator, HR manager, sales rep).
- People hold knowledge and experience in their heads that often isn’t documented anywhere.
People are critical for running processes and technologies
- Without people, processes and technologies cannot run.
- Losing a key employee also means losing know-how.
- Motivated and well-trained people increase your company’s resilience to risks (e.g., cybersecurity incidents).
What types of workforce can small and mid-sized businesses hire?
1. By employment classification (most important for management and compliance)
- Employees: Full-time — standard benefits, payroll taxes, health insurance (often via group plans), paid time off; or Part-time — typically fewer benefits but still employees; manage timekeeping and wage-and-hour compliance.
- Independent contractors (1099): High misclassification risk; different management approach than employees — you cannot control their hours and methods like employees.
- Temporary / agency staff: Hired via staffing agencies; costs and responsibilities are shared per contract.
- Interns.
2. By relationship to the organization (core vs. external)
- In-house staff — internal employees; require HR processes, development, and culture.
- Outsourced providers/vendors — external services (accounting, IT, maintenance).
- Gig workers — short-term workers via platforms.
How to manage people-related risks
- People risks include workplace safety, employment law, and tax risks.
- For contractors, manage through clear vendor/contractor agreements and scope of work.
- Document roles and responsibilities — e.g., who owns critical processes and systems.
- Plan for coverage and succession — what happens if a key person leaves.
- Train and develop — investing in people strengthens your most important assets.
- Protect knowledge — document procedures and capture know-how using policies, SOPs, and workflows.
- Consider adopting small business HR software.
How to categorize workforce by business criticality and risk
- Key personnel (critical roles) — operations stop without them (e.g., sole IT admin, key sales rep).
- Non-critical staff — more easily replaceable.
- Sensitive positions — access to money, data, or security controls → require controls and strong onboarding/offboarding.
What to Focus On
- Recruiting: Attracting and hiring the right talent
- Employee Retention: Keeping key employees engaged and committed
- Compliance and Legal: Staying compliant with labor and employment laws
- HR Outsourcing: Managing HR contracts and services for small businesses