Because Small Business is Big Business

Human Resources

Human Resources

Many small businesses leave human resources in the hands of accounting (because of the payroll aspect), or office management (because there’s no other place to put it!). And sometimes those accountants and office managers do a fine job of keeping things in line. They are organized and systematic, so they create “personnel files” and make sure everyone signs off on the policy manual. But at what point does a small business need to bring in expert HR help?

There is no formula that dictates when to hire an HR Manager. There are many factors, such as the nature of your business, the types of jobs you have, and the level of government or industry regulation your company must comply with, that must be considered. Below we’ll look at the key HR functions and what an HR expert may be able to provide that the Office Manager or Accountant can’t.

Compensation & Benefits

While payroll is fairly straight forward, compensation and benefits strategy can be very complex. It’s important to understand how much people in similar jobs get paid in your community so that you can attract the right people. Having a pay-for-performance scheme in place can positively impact retention, but it takes someone with experience to put a good plan together.

Some benefits are mandatory, while others are optional. The mandatory benefits are often based on the number of employees you have, so you need to have someone who can stay on top of the thresholds so you are in compliance. The Affordable Care Act continues to evolve, and it takes a good benefits advisor to sort through the requirements.

If you have fewer than 50 employees, I recommend hiring a consultant who can audit your compensation & benefits plans once a year and offer advice as your organization evolves and grows.

Legal & Regulatory Compliance

If you’re in a heavily-regulated industry such as construction, healthcare, food processing, etc., you will likely need to delegate responsibility for compliance to someone on your permanent staff. There may be weekly, monthly, semi-annual, or annual reports that an internal person must stay on top of. If you’re a government contractor, special requirements also apply, and heavy penalties can be levied if your company fails to comply. At a minimum, you need to understand the basics, like how long to keep personnel files, how to track I-9 information, and whether medical information needs to be kept separate from other personnel information (it does!).

Just as with compensation & benefits, HR law compliance often depends on how many employees you have. Everyone has to comply with the Civil Rights Act of 1964 (non-discrimination based on age, race, religion, etc.), yet only employers with 50 or more employees are required to comply with the Family & Medical Leave Act.

If your firm retains legal counsel, you may be able to include employment law compliance in that coverage to seek advice and help write policies. Many laws require companies to train employees (harassment in the workplace, safety, etc.), so you may want to hire a consultant to help with this aspect of compliance.

Check back next month where will discuss talent acquisition, performance management, and employee relations.  For more information check out my book A Small Business Guide to Peak Performance Through People.