Small Businesses: How to Know When You Need HR
Small Business Saturday just happened, so we’re giving all the love to our small businesses! As a small business owner, it’s very important to know when you need HR.
Some of the questions that Culture Works receives on a regular basis are:
- What is the purpose of my HR department?
- What stage of my business growth should I look into HR members?
- What different HR roles do I need for my small business?
- Is a fractional HR team a better option?
We’re going to break down some of these answers, and hopefully, guide you to understanding the role that HR can play in your small business.
What Is the Purpose of Your HR Department?
Before investing in an HR fractional team or hiring new employees, it can be helpful to gauge what your new team members would be doing for your small business.
Whether you decide to hire a fractional team or HR Manager, these are some of the roles and responsibilities they might cover:
- Employee handbooks and manuals
- Employee conflict
- Upper management
- Benefits administration
- Paid time off and leave
- Enforcing company policies
- Contract violations
- And so much more!
When Should My Business Start Looking for HR Team Members?
There are different factors that contribute to the level of HR needed for any company. In the next year, under the Affordable Care Act, the IRS is planning to increase employer penalties. As a small business, there is not much room for a financial error or blow.
One key element that is important to acknowledge is the update in the Employer Mandate:
“In accordance with the Employer Shared Responsibility Provisions (ESRP) of the ACA, employers with 50 or more full-time employees and full-time equivalent (FTE) employees identified by the IRS as Applicable Large Employers (ALEs), are required to offer Minimum Essential Coverage (MEC) to at least 95% (70% for 2015 only) of their full-time workforce and their dependents whereby such coverage meets Minimum Value (MV) and is affordable to the employee or be subject to penalties.”
Depending on the size of your small business, this would be a reason to make your company either partner with a fractional HR team or hire a HR manager to monitor employee benefits and payroll in compliance with the new ACA standards.
What HR Roles Do You Need?
As mentioned above, an HR manager or HR fractional team is your best bet as a small business. There is a difference in cost and outcome in fractional or outsourced HR, but, of course, this all depends on your specific situation.
Fractional HR tends to be more cost-friendly because hiring a fractional HR team can help reduce the cost of full-time employees while optimizing your existing team’s functionality. The cost of one full-time employee can be the equivalent of receiving a team of employees’ expertise!
Outsourcing, on the other hand, can mean a variety of things. It can mean completely relying on the outsourced team instead of hiring an in-house team, or it can be a partnership between your existing team with a company that performs similar or complementary functions. An outsourced team is often a replacement for an in-house team or role.
Still wondering if you may need to invest in an HR Manager or Employment Law Attorney? Read on.