Four Considerations to Grow Your Small-Business HR Department

The consensus among HR leaders is that once you’ve reached the 20-employee mark, it is definitely time to hire a dedicated HR professional. If your business continues to grow, you’ll likely need to expand your HR department.

Consider the following to handle this initiative.

1. Timing - Before you implement growth measures for your HR department, verify that now is the right time. Your small business is flourishing, but how long has this growth spurt been under way? And how sustainable is it? If your revenue forecasts are good and there’s a clear need to boost your headcount, then it’s time to expand your HR department.
2. Subtle Indicators - Hard dollar signs aside, look for other (subtler) indicators that your HR department needs expanding — such as the following:

• You’re having trouble staying compliant with applicable HR laws.
• You’ve been penalized by the government because of noncompliance.
• Your HR team is stressed out or burdened by their workload.
• Employee morale has dropped because of insufficient HR support.
• You’ve outgrown your current administrative HR processes and systems.

3. HR Needs - To understand what to implement, you must break down your HR needs, see how they stack up against your budget and prioritize accordingly. During this process:

• Examine your current and foreseeable HR responsibilities, including recruiting, hiring, onboarding, compensation, health and safety, employee benefits, payroll, time tracking, performance management, training and development, regulatory compliance, and employee relations, retention and termination.  
• Review the methods you use achieve your HR obligations, such as manual versus technology-assisted processes and external vendors.
• Note the new processes and employment laws you must adopt as your business grows.  
• Identify HR areas needing additional personnel.
• Estimate how many HR people you need and to what extent (such as full-time or part-time employees). Per the Society for Human Resource Management, small businesses with 1–250 employees often have an average of 3.40 HR people for every 100 employees.
• Determine job titles, duties and qualifications for your HR staff.

4. Strategy - Overhauling your HR function to accommodate a larger team and a more formal structure is a complex venture that should be executed in a strategic manner. Be sure to seek stakeholder input, including from managers, employees and business partners, to ensure a thoughtful, organized transition.

During strategy discussions, all options should be on the table, including when determining the most accurate, cost-efficient and secure way to manage your entire HR function.   

The topic of in-house HR administration versus outsourcing is likely to come up. And when it does, you’ll have to decide whether it’s smarter to administer HR fully in-house (meaning with your own resources) or to outsource a few or most HR duties.

Contact us today if you need an experienced HR consultant to help you nail down appropriate solutions and assist with strategizing.

Wendy Roberts prides herself on creating winning strategies while helping her customers maximize their resources and their profits. As a CPA, she knows her way around corporate financials. As an entrepreneur, start-up CFO and a former corporate executive, Wendy offers a broad insight into finding solutions to help her clients achieve exceptional growth and financial success. She has a BS in Accounting from Indiana University, MBA courses at the University of Tampa and years of experience counseling clients on financial and profitable success.

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