Why Businesses Are Never Too Small for HR Function

April 6, 2020

When we think of human resources function, we typically think of companies with at least a few hundred employees served by a dedicated HR department. HR for smaller businesses tends to be left to business owners and a couple of key managers. Still, that might not be the best way to go. Having designated HR functions in place from the get-go might be more advantageous to business owners.

Without established functions and staff members in place, HR can wind up being left to a single business owner or a family member willing to lend a hand. But know this: HR function is as much about compliance as it is about keeping employees happy. Leaving it in the hands of someone who does not fully understand the implications of compliance could lead to problems.

Compliance Isn't Simple

The first thing every HR worker learns upon graduating and entering the real world is that compliance isn't simple. What was learned in school does not even begin to scratch the surface. Indeed, the real world is fraught with compliance issues at multiple levels.

Compliance with federal regulations is the starting point. Such regulations are codified in legislation like the Fair Labor Standards Act (FLSA) and the Americans with Disabilities Act (ADA). Complying with just those two acts alone can put a tremendous burden on companies.

After federal regulations come state and local regulations. Needless to say that some states are more heavy in their regulations than others. At any rate, whoever oversees HR in a given company must be familiar with each and every regulation that affects how that company does business.

Getting Caught Off Guard is Not Good

Along with compliance comes enforcement. In other words, the only way government has to ensure that companies are complying with the various regulations is to enforce those regulations by means of civil litigation and fines. Far too many business owners are caught off guard by enforcement efforts that reveal they have not been compliant.

New business owners go into it with the understanding that their businesses will grow over time. With growth comes more complicated HR. Not having HR functions in place ahead of time could lead to a company being caught off guard by enforcement actions. If for no other reason, business owners are wise to set up HR function right from the start so that surprises do not pop up down the road.

Other Things to Do

Finally, HR is a lot like payroll in the sense that it is highly specialized. Company owners and managers are specialists in whatever it is they do. They are not HR specialists. Thus, the time they spend on HR functions is time taken away from more important things.

Here at BenefitMall we are specialists in payroll and some HR functions. We can handle both more efficiently and effectively than our clients. So that is what we do. We might have a client who specializes in residential construction. That client's expertise is in building homes. We are no better at home construction than they are at payroll and HR. We work together, with each of us handling our own specialties.

Building HR function into a business from the ground up doesn't mean having to hire a dedicated HR team before bringing anyone else on board. It does mean establishing policies and procedures that are capable of adapting as the business grows. Once HR becomes even the slightest bit taxing on ownership and management, it is time to consider either hiring a full-time HR team or contracting HR to a third-party provider. It's best this way.

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