It used to be that small and medium-sized business owners thought they could do without HR. Nowadays most entrepreneurs know that non-compliance with labor laws can result in employee lawsuits, bad publicity, and even criminal penalties. What remains a mystery, however, is how to get strategic-level HR expertise without spending a fortune.
Use Existing Resources
Historically, small and medium-sized business owners have had limited options. Doing the job themselves or using existing staff to handle HR responsibilities is a common approach, even though they don’t have any formal training or experience in HR. “A recent study released by ADP shows that HR at 70 percent of small businesses is handled as a side job by the owner or a staffer with other primary responsibilities” (Don’t DIY: Business owners delegate human resources tasks”, USA Today, Aug, 2017). Not only is this a risky approach (you don’t know what you don’t know), but it doesn’t allow for the owner or the staff members to focus on what they do best – the roles they were hired to do.
Use a PEO
Some owners have felt the best thing to do is completely outsource the HR function, using a Professional Employer Organization (PEO). When employers enter into a shared employment relationship, the PEO becomes the “Employer of Record”. They are responsible for payroll, benefits administration, worker’s compensation, and most other HR-related tasks. According to NAPEO.org, “In 2015, up to 14 to 16 percent of small businesses (with 10 to 99 employees) were PEO clients.” A small percentage, to be sure. That might be because there tend to be more disadvantages than advantages to using a PEO. Paycor’s article “Pros and Cons of Using a PEO Company” covers it succinctly. A theme among the concerns is that employers lose too much control.
Hire an HR Staff Person
Other small and medium-sized business owners decide the best thing to do is hire an HR professional. Depending upon the size of the company, one person in an HR role can, in theory, handle all of the day-to-day responsibilities. “Hiring a human resources representative can sometimes be the thing that separates a startup from a more stable business”, says Cecillia Barr in “4 Reasons Small Business Owners Should Hire an HR Rep” (BFS Capital, June, 2017). This can certainly be the case. But what happens when someone strategic is needed?
Entrepreneurs and owners inevitably will go through capital raising at some point, requiring a solid business plan that includes operating cost projections. Behind the numbers are staffing plans, compensation strategies, turnover projections, benefits plan costs, and much more. The HR representative handling the day-to-day flow of work does not have this kind of expertise. A staffing firm might be able to send a high-level HR person for a few months to augment, but that doesn’t fix the problem long-term. The next time you have a need that same person may not be available.
Today’s small and medium-sized business leaders are ready for a new solution, one that bridges the gap between their HR needs and the not-quite-right approaches from the past.
How Can Growth Operators HR Team Help You?
At Growth Operators, we provide fractional CHRO, Sr. HR Generalist, and HR Generalist resources for the life-cycle of your business. Fractional means for a fraction of the time (of a full-time resource). Some companies need us 5 hours a week, some need 30. Some need us for special projects or leaves of absence. What they all have in common is that they need expertise they don’t have and by using GO, they can have those resources at a fraction of the price by only using services when they are truly needed.
When you reach out to us we will set up a time to discuss your goals and concerns. We start employer engagements with our HR Assessment which allows us to help you prioritize your HR needs. There is no long-term commitment required and no retainer. Why not engage us on a trial basis and see the difference we can make?
We are here to help your business grow and succeed. Contact me at Jessica.email@example.com to talk about how we can take your business to the next level!
Jessica Docken, Partner
Full links to references:
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