For many companies, hiring a human resources professional is a milestone that separates a lean startup from a stable business.
While it can help to have someone solely focused on hiring, legal compliance, payroll services, and employee relations, doing so separates a company’s founders from several aspects of the business that can be crucial to maintaining company culture.
To find out what small-business owners should consider before they hire an HR rep, we spoke with two of this year’s winners of the Small Business Person of the Year award from the US Small Business Administration (SBA).
Lisa Mattiello, founder of the Rhode Island catering company Pranzi, and Joel Graybeal, co-owner of the North Carolina rock-climbing gym Triangle Rock Club, suggest asking yourself the following questions.
1. Am I spending too much time negotiating with employees?
Pranzi has 90 employees and just created a human resources department in September.
Mattiello says the biggest impetus for doing so was that she and her husband were getting too many employee requests for raises and time off, and she wanted a streamlined process for dealing with them.
“It was just getting out of control,” says Mattiello, who adds that she gives employees 12% and 13% raises compared to the 2% or 3% increases they would get at a big company. “It’s hard when people are coming to the owners of the company, and they keep hitting you up for vacation days.”
2. Do I need help administrating an employer-sponsored healthcare plan?
Serving as the administrator for a healthcare plan can be something of a headache, and you might want to hand over the reins to a professional.
Beginning in 2015, the Affordable Care Act will require companies with the equivalent of 100 full-time employees to choose between offering healthcare to those employees or paying a tax. In 2016, this cutoff will drop to 50 employees.
3. Am I having trouble retaining employees?
A good human resources department can go a long way toward making sure your most talented workers stay with the company. HR professionals can issue and analyse employment-satisfaction surveys, provide a safe space for employee complaints, and plan after-work activities that strengthen the bonds between employees and their coworkers.
“It’s important for us that we make sure our employees stay,” Mattiello says.
4. Am I spending time on duties that do not need my expertise?
Triangle Rock Club has 65 employees and is about to hire a human resources director. Graybeal, the company’s co-owner, says that right now the club’s directors are intimately involved in processes like hiring, training, payroll services, and administering the company health plan.
Hiring a human resources director would allow him and his partners to focus more on growing the company and developing its long-term strategy.
In fact, he says one of the big mistakes he sees other business owners make is falling into the trap of believing that they need to be involved in every aspect of the business for it to run smoothly.
“My goal is to make myself obsolete in terms of how the business is run, and (co-owner) Andrew (Kratz) and I share that same goal,” Graybeal says. “I want to empower people, I want to coach people, and I want to educate people in terms of how they can make decisions.”
5. Do we need to invest in creating a clear set of employee policies?
When you’re starting out, it makes sense to deal with each employee issue on a case-by-case basis, but having a human resources professional create a set of uniform procedures can save you time in the long run, and also make sure you stay on the right side of the law.
At Pranzi, the human resources team is putting together an improved employee manual and setting up standardized practices for how and when workers can ask for time off, and how managers can write employees up for tardiness.
When things are busy, as they were at Pranzi during wedding season this summer, these sorts of tasks can get lost in the shuffle.
“During the height of craziness, that’s when it hits you,” Mattiello says. “I just want to make sure that we’re on the up and up.”
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