Too Small To Need HR?

Are you playing ‘Work Place Russian Roulette’ with your business?

Welcome back to another blog from us at ADDA Infusion. This week we’re getting serious and tackling the question that I’m sure all you business owners out there ask yourselves: am I too small to need HR?

I get that, for a lot of you, it will probably seem like a necessary evil. One that you’ll deal with once your company is big enough.

The trouble with this ‘can-kicking’ mentality is that you are A: not being clear with yourself as to what ‘big enough’ really means, and B: leaving yourself wide open to possible litigation.

I know that this sounds dramatic, but ignoring HR is like playing Russian Roulette with your business, every time your staff interact with each other, a customer or the public!

Lest you think that this is just scare tactics and hyperbole, designed to push unnecessary HR services on you; the US Chamber of Legal Reform statistics, show that 43% of US small businesses will face litigation.

A new Hiscox survey, showed that one in five small businesses will face trial, because of employee-related litigation. Of those cases: one in five will end in settlement for over half a million dollars.

This doesn’t include the costs of going to trial either, which can be anywhere north of $125,000!

Still think you’re too small to need HR? These statistics are real.

This is not to say that the government targets small businesses on purpose. Owing to their tendency to have less robust HR processes and compliance in place: they do tend to be over-represented in those statistics.

Larger companies tend to have been trading longer, have better established processes and bigger legal teams to defend them from litigation in the first place. This may well be unfair (or feel that way) but nevertheless: it is how it is. This doesn’t mean that your small business can’t protect itself just as well as the bigger companies though!

So, why do you need HR now?

Well firstly, as a preventative; HR is there to make sure that there are clearly defined and understood, policies and procedures that everyone can follow. These can be looked to at times of dispute, to provide guidance and avoid escalation to a legal stage.

These protect you and your company in the event of a dispute. They essentially form an agreement between you and your employees for the conditions under which you all work. Should someone seek to legal action against you, these can be referred to first, in order to hopefully deescalate the situation.

Of course these agreements must fall within the bounds of the law and not be in contravention of anybody’s constitutional or human rights. This is again where having HR there, to ensure compliance, is vital.

“So now I know why I’m not too small to need HR; how do I add it to my small business, without a large budget to do so?”

Well, there are a number of options open to you, that don’t involve hiring an entire department of staff to run things for you, day and night.

Hourly, outsourced consultants can offer a ‘pay as you go’ type approach, giving you the flexibility to use them as needed. You can even keep them on retainer, once you feel like you have a grasp of your HR needs on a regular basis.

There are also a number of online/over-the-phone solutions. They can offer you a degree of basic coverage at a minimal cost. These usually involve remote guidance from a call center, for something like $100.

What would I recommend?

Well it really depends on your type of business, who your are and what you need. Finding the right HR solution for you, is the same as finding the right business partner: you need someone who has got your back.

You need to know that, when you face litigation, you have the support of a competent HR team (be they in-house or not) to help avoid damaging legal costs.

An online or call center based HR company might offer you a baseline of compliance, but in complex, high-stakes situations; they can prove less than effective.

The analogy I use with those kinds of services is that of a car mechanic. Yes: I could call one up and have them guide me through the repair or service of my car, but would I really trust the result as much as having them do it for me?

How can you vet HR companies to find the right one for you?

Well, you can check them out on glassdoor.com and indeed.com for a start. Remember, this isn’t just a site for prospective employees, looking to find out more about their potential work place. It’s also there for you to look into how well regarded other service providers are, and whether or not they match your company ethos.

Pay attention to how many positions they’re putting on, the average tenure of their staff etc… Some of these online companies have a very high turnover of staff. This doesn’t offer you much continuity of service (and therefor confidence) when it comes to facing issues in the future.

I know this all sounds like a heavy subject matter for, what is intended to be a fun and upbeat blog.

I’ve just seen it so many times with small companies who consider themselves too small to be open to risk. They think “why do I even need HR?” only to find themselves hit with litigation and scrambling to find help. Then they reach out to us at ADDA Infusion, and we have an almighty uphill struggle on our hands. Often with much higher costs than if we’d been consulted before problems arose.

I get it: policies and procedures are hardly a sexy topic, for start-ups, entrepreneurs, small businesses et al… You want to get on with what you set out to do! These things are here to ensure that you are able to work in a relaxed environment. Without worrying about where an interaction could land you and to focus your time on what it should be on: growing your business!