When and why should a Small Business hire HR?

This article summarizes when and why a small business should delegate HR responsibilities. It looks at the functions of HR and provides managers and owners with a cost/benefit analysis that can be applied practically and in the real world.

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HR is a business department that manages employee resources. It can be located in-house, outsourced, or handled by a 3rd party. Either way, they are meant to improve the way people operate within a workplace.

HR’s tasks are wide ranging and span across the business. Interviewing, hiring, and onboarding are the most common functions but not all of them. Handling employee training and concerns, managing payroll, and ensuring legal compliance are all essential human resources tasks. Essentially, HR becomes a link between employer and employee, and also acts as an arbitrator who prevents or resolves workplace issues.

The question now for managers and owners: is the time required to handle all of those staff-related issues worth your time or is it better for the company for you to focus on growing the business and running day-to-day operations?

Organizations with less than 20 employees are often better off when the owner delegates HR responsibilities to someone else, experts say. One school of thought says the general organization of your business is an indicator as to when you need HR. As a business grows and roles and departments become formalized, that’s when HR needs to be brought on. Another school believes headcount is the indicator to listen to – once the business has between 50-100 employees is when a human resources department should be considered.

Perhaps the most important factor is by focusing on revenue and asking “Would my time be better spent growing the business?” If you can use that time to generate additional revenue then the cost of a new salary is worth it.

Another important factor to consider is that HR deals with a lot of paperwork that requires precision and dedication. If a business owner is barely coping with the responsibilities of running the business and managing HR, they could find themselves in record-keeping trouble fast. Important paperwork, up-to-date records, archived materials are just a few of the backend things HR deals with and that need to be exact as documentation issues can quickly balloon into legal problems.

It is not only important for business leaders to delegate at the right time, you should also consider whom you’re entrusting with this work and how they will add value to the position, department, and company.

Finally, if you do decide to start an HR department, you need to find someone who is discreet and can be trusted, is organized, and is an empathetic listener who can properly guide employees. Ideally, that person would understand and appreciate small business and have experience in that environment. 

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