Why all Businesses Need HR

by Karolynn St-Pierre

Almost every large company has an in-house human resources department. But what about small businesses? In many cases, small business owners try to take on the tasks themselves or pass on HR duties with another employee, such as an accountant or administrative assistant, as a cost-saving measure. Many may wonder at what point does creating an HR department or bringing in a HR consultant become beneficial?

Human resources encompass a broad umbrella. HR functions can include things such as payroll, benefit management and tracking, hiring, recruiting, interviewing, training, signage and posters, new hire paperwork, employee handbook creation and edits, terminations, discipline, evaluations, job descriptions and professional development, to name a few.  It’s also vital that human resources keep up to date on any changes to federal, state and local laws that could impact the business. Considering the extensive duties that HR must perform and keep up on, it’s important that small businesses bring in an HR professional at the ground floor.

For better or worse, human resources is a constantly morphing and changing beast. Think of all the major laws and court decisions over the past few years that impact businesses and employees — medical marijuana and/or legalization of marijuana, civil unions vs. gay marriage vs. none at all, healthcare — and those are the only the headline stories. There is a myriad of laws and decisions passed every day that could affect you and the way you do business. Keeping up with these changes can be time consuming. Additionally, they can vary from state to state.

Oftentimes, employers think they can manage the documentation and paperwork that comes with employees, such as I-9s, W-4s, company car policies, noncompetes, nondisclosure agreements, state employment verification, employee handbooks and the like.  What employers fail to realize is that these are legal documents. Grabbing a document from the Internet can mean getting terms wrong or missing sections, and even simple typos can have a huge cost. Writing the date wrong or using the wrong color ink on forms such as an I-9 can also be subject to penalty.

Human resources departments also need to be aware of many nuances associated with employment. What signs need to be hung around the office? Where? Why is this employee salaried and this one hourly? What’s the difference between an employee and contractor? Is vacation and paid time off the same thing?  Do I need to offer FMLA?  The questions are endless, and getting the answers right is important. Researching all these questions is a daunting task that can take up a lot of time for employees with other duties and owners with other concerns.

The costs of getting HR wrong can be devastating to a small business. Numerous state and federal agencies are charged with auditing businesses, both big and small, to bring in revenue. The typical auditor will bring in seven times their salary — and large businesses have more layers of protection than a small business. Fines and penalties can be huge — for example, mistakes on the I-9 start at $500 per employee per occurrence. Often there is no warning — an auditor many simply show up at your door and investigate your practices. While HR won’t make you completely bullet-proof, having a professional handle these responsibilities can protect you and your business.

Not only do small businesses face fines and penalties from federal and state auditors., there is also risk of lawsuits from employees. Lawsuits against employers have been growing exponentially over the past decade. Being proactive and getting it right from the get-go can save thousands and 10s of thousands of dollars in later legal fees. Lawyers will not ve willing to take on cases they can’t win. Having strong HR to keep the business compliant can be the strongest defense.

There are many options available when it comes to HR for varying business sizes. Often, there are consultants who will work with small businesses, or there are helplines that advise and will walk clients through the various processes. Like any business partner. it is important to interview and make sure that a company finds the right fit.

While many small businesses think foregoing HR is saving costs, in the end, the result is often the opposite. HR is only as effective as you let it be — bringing in professionals only when the situation has exploded or issues are arising isn’t effective. Having HR shape and grow with the business can result in long-term savings, happier employees, reduction in later fines and fees and, ultimately, a better business.

Karolynn Humberd St-Pierre is a former employment attorney, Senior Human Resource Professional, author and speaker known for her expertise in helping businesses navigate the complexities of human resource management. Her book, The Small Business Human Resource Bible has become a desktop guide for small business owners nationwide. She is an active speaker with the Small Business Administration and the Small Business Development Centers on HR legal related topics since 2010. In 2009 Ms. St-Pierre founded Symmetry Consulting, LLC. Symmetry Consulting partners with its clients so they can focus on their bottom line and business growth, while Symmetry manages their HR functions and ensures compliance with labor laws. Find her on Facebook, LinkedIn and Twitter @KarolynnStPierr.