Part one of this series introduced the concept of the ad hoc approach to HR for small business and how it can be detrimental. In part two, we dig deeper, looking at the high toll this unsystematic approach can take on those serving as ad hoc HR managers (aHRMs).

A Massive Time Investment

Whether the aHRM role is being assumed by the small business owner or by an employee, performing HR tasks drains valuable time from that person's primary duties. In fact, according to a new ADP survey, the aHRM spends one entire day per week, or 20 percent of all working time, on HR tasks that are secondary to their main role.

On average, small businesses have 1.6 employees performing HR tasks on an ad hoc basis, and for larger small businesses (with between 25 and 49 employees), that number increases to 2.1. Employee time, of course, is every small business's most valuable asset and needs to be strategically allocated in order to drive business growth. ADP estimates that the annual time-related cost of ad hoc HR for small business is $27 billion in the United States.

Ad Hoc HR Can Distract Owners From Growing Their Business

Opportunity costs are highly relevant for small businesses: When you invest time or money into one thing, that resource is then not available for something else. So when an owner with no formal HR training allocates 20 percent of their limited time to performing HR tasks manually (for example, processing payroll using paper or Excel spreadsheets, or tracking employee data with paper files and manila folders), they're taking valuable time away from growing their business.

Time spent by aHRMs on HR tasks might be better spent on the front lines, supporting employees, visiting potential customers, strengthening relationships with existing customers, or planning to take advantage of emerging market opportunities.

Ad Hoc HR Can Increase Employee Stress

Let's begin by stating the obvious: Your bookkeeper or office manager or accountant is not an HR professional and (most likely) doesn't want to be one. According to ADP's survey, only 10 percent of aHRMs enjoy performing HR tasks. The tasks themselves are difficult, and employees are seldom given the training and tools they need to perform them well. Consider all the work HR professionals do. The ADP survey indicates that only one in four aHRMs is fully confident that they're keeping up-to-date on HR-related compliance regulations.

It's not hard to see, then, how ad hoc approaches to HR for small business are potentially powerful drivers of owner and employee stress, and how they can distract workers from their core functions, drive employee disengagement and, ultimately, increase employee turnover.

In the next article in the series, we'll look beyond the human costs of ad hoc HR and consider the impact it can have on the HR function itself. Find additional insights by visiting the aHRM study website.

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Read the rest of the series:

Part One: The Ad hoc HR Manager: The Secondary Nature of HR in Small Businesses

Part Three: The Ad hoc HR Manager: The Potential Risks

Part Four: The Ad hoc HR Manager: How HR Should Support (Not Limit) Your Growth

The ADP Ad Hoc Human Resource Management Study was a blind online study among 1,054 businesses with 5-49 employees (December 2016).

Tags: small business Human Resources Small Business Payroll Employee Engagement