Small Business Need HR
As a Human Resources Consultant 75% of my clients are small businesses. I typically come in just past their initial start-up phase when they have at least 15-25 employees, sometimes less sometimes more, depending on the business. At this point, most HR matters have been handled by an administrative support person, financial person or the owner themselves. Things get more complicated the bigger the company gets or the longer it is in business. HR issues arise that are beyond their scope of knowledge, what issues were not so important before, now become points of contention and the company feels the strain. Redirecting management’s focus on growth and hindering its ability to seize opportunities.
Not Business As Usual Anymore
Usually business owners reach out to their legal and financial advisors to find out what they believe they need to know. You may even think you still need nothing more, but I am here to tell you, not only are you stepping into a danger zone but some of your advisors may not know all YOU need to know.
Why You Need To Change
Let’s put aside that HR is my profession and I see things from that perspective. All you need to do is look at the thousands upon thousands of employer/employee legal issues that come up on court dockets to get my point. The Department of Labor and the IRS are not the only regulatory bodies that govern employer/employee relationships. There are a plethora of regulations from other federal and state agencies as well as local municipalities governing various aspects of employment that an employer need to consider. And, if a complaint be made against an employer, all legal agencies, I can’t emphasize this enough - ALL LEGAL AGENCIES, lay responsibility on the employer, no matter what. You as the employer are guilty until you prove yourself innocent.
In my 25+ years of experience the HR function was always thought of a necessary evil, a cost center that only subtracts from the bottom line. Over the years I have seen big corporations make cut backs in this area, downsizing to all but the barest essentials. The small business sector as done the same thing if they had HR at all. When issues arise, the giants have lawyers on retainer or on staff to get them out of trouble. They absorb the hit as simply the cost of doing business. A small business, can be devastated by one employee claim. Legal fees, penalties, fines and awards can financially cripple a company while the damage to its reputation, the loss of time and productivity can lay to waste to a small business. The cost of not having all your HR ducks in a row can more than negatively impact your bottom line.
As a business owner, you can never eliminate risk completely but professional HR management can protect your business and limit employer risk. Enough scary information, listen to the finding of a study I came across a few months ago. It has been determined that those companies with good core HR practices experienced up to 3.5 times more growth and 2.1 times more profit margins than those companies that did not have an HR professional managing this area. How’s that for your bottom line?