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Thought Leadership

When you first start a business, the Human Resources (HR) function will fall in the lap of the business owner. 

For a while, you can get by with that.

Some of the functional HR responsibilities are:

  • Payroll processing and compensation philosophy
  • Benefit offering determination and administration
  • Recruiting, Hiring, Onboarding and Offboarding
  • Employment law compliance
  • Policy development
  • Recordkeeping
  • Employee relations 
  • Monitoring employee time and attendance
  • Building company culture

The business owner will probably be able to handle most of these components initially when the business is first getting off the ground, and you have one, maybe two, employees. 

But as time goes by and the business grows, the business owner may need to delegate these responsibilities to someone else. 

While some of the day-to-day HR functions could be handled by a finance or administrative team member, you must be careful. The legal compliance responsibilities – such as the labor and employment laws; federal, state, and local laws – get complicated. And the rules change the more employees you have. You will need someone in the HR seat who has the skills and knowledge in these areas to address the issues and make sure your business is compliant.

Signs it’s Time to Hire

So how will you know you’re ready to hire for the HR function?

Unfortunately, small businesses don’t usually have the mechanics, the diagnostic materials, or key performance indicators in place to help them understand when to hire. It’s very much a crapshoot. 

So, the answer lies in observation. Most business owners know it’s time when the HR tasks begin to interfere with running their business.  Or their employees are complaining about the workload, and the owner can see just how overworked they are. Or when the customers complain that they aren’t getting the service they expect. 

In House or Outsource?

Outsourcing for HR may be a good solution for a small business that can’t yet afford the expense of a full or part-time HR professional in-house. But the sooner you can bring in a dedicated HR team member, the better.  It could be a manager or generalist depending on your needs.

An outsourced HR professional rarely gets to know and understand your team the way an internal person can. Outsourced firms are typically more focused on the process versus the company and their team members.  It’s tough for employees to build trust with an HR professional who is not fully present and solely dedicated to the team. 

It’s a challenging hire because it’s 100% overhead and extremely important to get the right cultural fit. It’s also essential to hire someone with experience working HR in businesses that are larger than yours. Compliance rules change the more employees you have, so it’s helpful to have someone in place that understands the legal ramifications of growing to 25 employees, from 25-50, above 50, etc.

Whether you’re an emerging business or more established, the HR needs are essentially the same. You will still need to handle payroll and benefits, policy development and maintenance, have an onboarding and offboarding process, manage the compliance dynamic, and maintain the company culture. It just gets more complicated as the business grows, you add employees, and the needs become more significant. So the HR function must change to meet them.

Who is handling the HR needs in your business? Share with us on Facebook, Instagram, and LinkedIn!