Not all companies start off with an HR department and business leaders often wonder when they should begin investing in HR. Some recommendations suggest investing in HR when your company reaches a certain employee headcount, when you want to start implementing company policies, or when compliance becomes an issue.
The truth is that investing in HR should begin from your first hire, because HR is the guide that will mobilize your workforce and mitigate risk for your businesses growth.
Purpose of HR
HRZone says, “The main point of the HUMAN RESOURCES team is to ‘develop, advise and implement policies within the workplace’ and generally find a way to keep staff and managers alike happy.” Or in other words, human resources should execute your company’s people strategy.
An additional responsibility is to keep your company compliant with federal, state, and local labor laws. By constantly monitoring legislation that impacts your business, HR mitigates the risk that your company will be fined or taken to court for noncompliance.
The Importance of Compliance
Ashley Kaplan, a senior employment law attorney for the HR direct family of brands, says, “Many small businesses think they can fly under the radar with some of the bigger federal labor laws . . . but the truth is, the labor law umbrella covering businesses is extensive, and every employer needs to be aware.”
The Fair Labor Standards Act (FLSA) and IRS employee classification, Equal Employment Opportunity Commission (EEOC) regulations, Family and Medical Leave Act (FMLA) requirements, and Affordable Care Act (ACA) mandates, are all labor laws that govern the processes of your business. Employers can’t make the assumption that they are completely risk free just because their business is small.
Mitigate Litigation Risk
All it takes is one workplace mistake, whether intentional or not, for a business to face litigation. A begrudged employee who felt they were mistreated, a job candidate who believes they were discriminated against, or an untimely IRS audit all have the potential of costing your company thousands of dollars in court fees as well as the potential of receiving bad press. It may take investing in damage control, meticulous budgeting, and many sleepless nights to recover. And all of this can occur before reaching the 50-employee milestone.
HR is equipped with the knowledge of how to mitigate risk. It can resolve workplace issues. Since there are too many to name, it is vital that businesses have access to HR to mitigate litigation risk.
Executing Your People Strategy
Developing your company’s people strategy begins when you consider hiring a new employee. You might wonder what kind of employee you’re looking for? How you will keep this employee engaged? What benefits you should offer? HR can answer these questions and provide guidance to create an effective people strategy and execute it. The right direction in all of these areas will help retrain your top talent.
Sooner the Better
Hiring someone in-house to handle HR is not always reasonable. With a small workforce, there may not be enough to justify a full-time employee. The optimal solution is to have access to HR experts and a Human Resource Information System (HRIS) to provide best practice advice without needing to hire additional staff. Whatever solution businesses choose to implement; one thing is certain: every moment a business waits to invest in HR is a moment it is exposed to risks which could hinder growth.
About the Author
Andrew is the Marketing Communications Specialist for Zuman, the one solution for HR, payroll, and benefits administration that supports growing small to midsize businesses.More Content by Andrew Larsen