Does a Small Business Need Human Resources? 5 Signs It's Time for HR

As companies – and employee counts – begin to grow, owners and managers may start to wonder: Does a small business need human resources support?

When companies have only a handful of team members, staff often can work together effectively without formal processes. HR needs are simple, allowing the owner, office manager or another employee wearing multiple hats to handle those responsibilities. Tasks like hiring, compliance, payroll coordination and policy development and enforcement are generally manageable, and these businesses can operate successfully for years without dedicated HR support.

As businesses grow, however, people-related responsibilities become more complex and time-consuming. More employees bring new expectations and new questions. Leaders need management training. Employment laws and HR compliance get more difficult to navigate. Recruiting and hiring take more time. Processes that once worked informally may no longer provide the consistency or structure a growing organization needs.

So, when do small business truly need HR support?

Several indicators suggest that a small company has reached a point where a more structured HR approach is not only advantageous, but also necessary. Being aware of these signs can help business owners decide whether their current human resources structure is still effective or if they need to bring in professional HR reinforcements.

Common Signs Small Businesses Need HR Support

Here are five indications a small business needs HR:

Hiring Is Taking More Time Than Expected

Business growth leads to additional hiring. The process of writing job descriptions, publicizing openings, reviewing resumes, scheduling and conducting interviews and onboarding new hires can quickly consume leaders’ time.

Without efficient, legally compliant HR processes, maintaining consistency throughout the hiring experience can be difficult, leading to staffing bottlenecks, increasing pressure on existing employees and slowing a company’s ability to keep pace with growing demands.

Managers are Handling Employee Issues Inconsistently

Without formal training, managers in smaller companies may not know how to consistently apply policies, have effective performance conversations, discipline or document. Those inconsistencies erode employee trust and morale, creating a toxic, “us vs. them” culture that leads to declining employee performance and higher turnover and setting the stage for legal issues.

Policies Are Becoming Harder to Enforce

Company policies can become more difficult to manage and enforce as a company’s workforce expands. Strong HR policies – summarized in an employee handbook – are necessary to ensure a company handles PTO requests, attendance expectations, dress code requirements, remote-work arrangements, workplace conduct concerns and other employee issues fairly and unwaveringly. Without clear policies, employees lack a clear understanding of expectations, and confusion prevails.

Compliance Questions Are Piling Up

With business growth, questions about state and federal wage-and-hour rules, leave laws, record-keeping requirements and state-specific regulations become more persistent. This is especially true for small businesses that begin operating across state lines.

As compliance obligations mount and become more complex, HR support helps to reduce risk, ensure accuracy and keep the small business aligned with changing requirements.

Leadership is Spending Too Much Time on HR Tasks

HR responsibilities can quickly consume valuable time that owners and managers need to devote to company growth. If leadership is increasingly dealing with people-oriented issues and other day-to-day HR administrative tasks, it’s a sign to add HR support to ease those burdens.

RELATED: HR for Small Business - A Comprehensive Guide >>

What Size Company Needs HR?

Business owners sometimes assume that hitting a “magic number” of employees automatically signals a need for HR assistance. In truth, no specific employee count creates a tipping point that indicates it’s time to get human resources support. That necessity comes when current HR demands become more complex and time-sapping than owners and managers are comfortably equipped to handle.

Factors like industry regulations, workforce structures, multiple supervisors, multi-state employees and rapid growth often create HR challenges long before a specific headcount might suggest. While many businesses begin reassessing their HR approaches when they reach 30-60 employees, organizational complexity is a better indicator of the need for additional HR support than size is.

Are Your Current Processes Still Working?

If any of these challenges sound familiar, it’s time to assess whether your small business needs HR support.

Your business preparing to grow is another checkpoint that tells you it’s time to evaluate the capabilities of your existing HR approach to decide whether it can scale as your business advances. Processes that worked with a smaller workforce may not provide the structure and scalability a growing business requires.

What Comes Next When HR Becomes More Complex?

Businesses have a range of support options to help manage increasingly complex compliance, employee relations, payroll and benefits. Depending on their goals, resources and growth plans, companies may consider, including:

• Building internal HR capabilities

• Working with HR consultants

• Outsourcing certain HR functions

• Partnering with a PEO

The right path differs by organization, and understanding the available options is an important first step in evaluating which approach fits your business needs.

RELATED: PEO for Small Business - HR Support That Grows With You >>

Building a Stronger HR Foundation

If you see your business in the issues above, Axcet HR Solutions can help. We bring an expert, local HR consulting team to every partnership, and we establish long-term relationships with clients.

Our depth and breadth of expertise enable our small business clients to grow their companies and scale their HR infrastructure accordingly without the expense and hassle of hiring an in-house team.

Axcet offers tailored human resources, benefits, payroll and safety plan solutions to small and mid-sized companies. With Axcet, you’ll have a one-on-one relationship with your dedicated HR consultant, not sessions with randomly assigned call center representatives. We invite you to contact us today >>

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