Human resources requirements for small business aren't so different from those of Fortune 500 companies: perform HR tasks competently and at minimal cost, engage employees and comply with HR-related regulations. Getting your HR right is never easy, but the risks and challenges only grow when you approach it in an ad hoc way, delegating the tasks and responsibilities to employees who lack the necessary HR training, tools and time to perform the work successfully.
In part one of this series, we discussed how prevalent ad hoc HR is for small businesses, with 70 percent of surveyed small business taking an unsystematic approach to HR. In part two, we shed light on the heavy costs of ad hoc HR in terms of employee engagement, productivity and stress. Here, we'll explore the impact of ad hoc HR on the HR function itself.
You're Only Human
The ad hoc HR manager (aHRM), almost by definition, lacks HR training and views HR tasks as secondary to their core function, which impacts the way HR tasks get done. According to an ADP® survey, half of aHRMs track employee information and benefits manually and few have any certified HR-related training. If they have a question that feels too important for an internet search, the aHRM may call their CPA or attorney.
Specialization, expertise and experience add value, no matter the function or the organization. A football team doesn't ask their star quarterback to play middle linebacker, nor do they ask their middle linebacker to play quarterback. Because a great quarterback and a great middle linebacker are both important, a good coach dedicates each player to one function only. When it comes to your small business, having the expertise of a dedicated HR professional can help the whole team win.
According to ADP's survey, small businesses with an ad hoc, manual approach to HR are likely to have inefficient, mistake-prone HR processes simply because manual processes leave more room for human error. The risks involved are high. HR-related mistakes can negatively impact employees (for example, payroll errors) and compliance failures can put a business at risk for large regulatory penalties.
From payroll and tax processing to compliance issues, conflict resolution, employee recruitment, development, performance reviews, and more, today's HR function is responsible for a host of tasks that have a direct impact on employee engagement and business success. An unfocused aHRM simply isn't capable of delivering on all the human resources requirements for small business. In fact, many aHRMs do not feel fully confident in their ability to perform the function without making mistakes.
Think about this: When employees aren't performing up to your expectations, you need to offer constructive feedback. If you fail to document performance-related feedback (perhaps because you didn't know you needed to or because you didn't have time) and then decide to terminate the underperforming employee, they could seek unemployment benefits or feel justified in filing a wrongful termination lawsuit if adequate performance documentation was not presented at termination. In either event, it's a problem that a dedicated, certified HR professional may have been able to prevent.
Find additional insights by visiting the aHRM study website.
In the next, and final, part of this series on aHRMs in small business, we offer advice on how you can improve the role of HR at your company, even with limited resources.
Stay up-to-date on all the latest trends and insights for small and midsized business owners: subscribe to our monthly e-newsletter.
Read the rest of the series:
The ADP Ad Hoc Human Resource Management Study was a blind online study among 1,054 businesses with 5-49 employees (December 2016)
SIGN UP FOR THE THRIVE NEWSLETTER