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Updated Apr 04, 2024

7 Signs It’s Time to Hire Your First HR Person

Here are a few key indicators that it's time to consider bringing on an HR employee for your small business.

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Skye Schooley, Senior Lead Analyst & Expert on Business Operations
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Human resources (HR) at a company often consists of a single HR professional or an entire HR department — either way, they handle all matters related to an organization’s employees. These professionals are responsible for hiring and onboarding, monitoring employee time and attendance, managing employee compensation, organizing employee training and development, fostering a company culture and maintaining legal compliance.

However, if you’re like many other small business owners, you may choose to handle HR yourself, costing you several hours a month. This can be troublesome for someone who is already being pulled in a hundred directions. An alternative is hiring an HR professional and there may be warning signs that’s what your growing company needs.

Signs it’s time to hire your first HR person

As your business grows in size and complexity, an in-house HR professional often becomes a necessary next step. We identified several key telltale signs to help you determine if it’s time to hire your company’s first HR person instead of handling HR matters yourself.

1. Your time is needed elsewhere.

As a business owner, you are likely wearing many hats, sacrificing your time to keep costs at a minimum. Taking on HR responsibilities makes good financial sense while your company is in its early stages, even if it means a few late nights spent handling everything involved with HR. There may not even be enough personnel-related work available to necessitate hiring a full-time HR employee.

However, if you’re personally dedicating 18 or more hours a month to HR, you may want to reevaluate how you invest your energy. What’s your time worth? What higher-value endeavors would you tackle if you had that time back? Moreover, if you’re overwhelmed and your to-do list is out of control, this can have a trickle-down effect on both morale and the bottom line. 

Ask yourself what fires you up about running your business. Would doing more of it benefit your company? Are there things nobody else can do that you’d like to spend more time on? If the benefits of focusing your time elsewhere outweigh the cost of delegating HR tasks, it may be time to hire someone to take HR responsibilities off your shoulders.

Editor’s note: Looking for an HR outsourcing firm to handle your business’s human resources? Fill out the questionnaire below to have our vendor partners contact you about your needs.

2. You’re struggling to maintain legal compliance.

Companies must abide by labor and employment laws on the federal, state and local levels. These laws enforce equal employment opportunities and safeguard the safety and health of workers on the job. Even the most diligent employers can have trouble understanding and abiding by every applicable law, which is especially true for those who operate in multiple cities or states.

When a slew of new employment laws entered the scene in 2020, one-third of small business owners weren’t even sure if the laws had any impact on them, according to a Homebase survey. With so many moving parts, uncertainty can creep in. Business leaders we’ve spoken to report wondering if they are missing something critical, especially when they don’t have more time to make sure things are being done right.

TipBottom line
HR compliance is a challenge for any business owner. Learn how to overcome these top HR compliance challenges.

Whether you’re managing HR yourself, outsourcing certain tasks or delegating to a nondedicated employee, how confident are you in both your compliance and best practices? Are you spending a lot of time speaking with HR consultants or wading through the internet trying to stay on top of current laws? Depending on your answers, it may be more cost-effective to bring in a dedicated HR professional. 

If you’re uncertain about maintaining legal compliance, this may be an excellent opportunity to bring on an expert who can mitigate risk and relieve you of any nagging worries. An in-house HR staffer can increase your confidence that everything is being handled responsibly and correctly. 

3. You need help with staffing, onboarding and developing your team.

Unemployment rates are low, while demand for top talent remains high. Finding and recruiting solid employees is difficult, especially in a world where remote and hybrid work is common. You have many competitors in securing the best employees, which is why it can be helpful to have a trained HR professional dedicated to staffing your business.

Plus, once you’ve hired your employees, you’ll want to keep them, which is next to impossible if you don’t have strategic employee onboarding and professional development plans in place. If your onboarding process only consists of the new hire signing some paperwork, consider hiring an HR professional to enhance your approach.

Likewise, if your employees don’t have a clear development plan in place, they are likely to leave your organization in search of better opportunities. If you notice this as a cause for high employee turnover, it may be time to hire an HR leader to take the reins.

Did You Know?Did you know
Onboarding and orientation are not the same things. Orientation is a brief process that familiarizes a new employee with the company’s vision, values, workspace and colleagues. Onboarding is a longer process (sometimes taking several months) that provides the new employee with more information on things like job training, best practices, mentorship and company policies.

4. You’re growing — with no plans to stop.

As teams scale, growing pains are to be expected — even celebrated. Each exciting milestone brings its own set of challenges. But growth also sometimes makes things more complicated. Communication may start to break down, especially if employees and contractors are spread out over multiple locations. 

There may be limited bandwidth to offer employee evaluations. New-hire onboarding might become a handshake and a signature. It could be challenging to answer employee questions, discuss sensitive issues and manage workplace conflicts. Perhaps not everyone is aware of company policies, either because you’re uncertain of them yourself or because they weren’t communicated (or even written down anywhere).

The key is recognizing when issues are out of hand. Companies with less than 20 employees can often handle HR on their own, but if you’re on your way to 50 employees or more, you’ve likely noticed some inefficiencies, making it time to consider hiring an HR professional. Based on per-employee pay and the cost of your current HR solution, is that something you can afford right now?

If hiring a dedicated HR professional isn’t financially feasible now but will be in one or two years, consider other solutions in the meantime. This could mean delegating HR tasks to a nondedicated employee or using an online HR service provider (learn more below). The most important thing is finding a solution that fits your particular business and having a plan for when you outgrow it.

5. You want to keep employee compensation competitive.

An important function of HR is to ensure employees are paid fairly and accurately. If you struggle to attract or retain employees due to noncompetitive pay, an HR expert can help you with compensation management. For example, they can reevaluate your compensation packages to ensure you are offering competitive wages and attractive employee benefits. [Learn what total compensation is.]

HR professionals are also responsible for other essential compensation functions, such as tracking employee time and attendance, managing time-off requests and running payroll. As your team grows, these tasks can be difficult to do on your own, especially if you’re doing them manually.  An HR leader equipped with the right tools, such as HR software and high-quality payroll software, can take this off your plate.

FYIDid you know
A great way to automate and streamline your HR processes is to use top-rated HR software. Either you or an HR professional can set up the software to meet your needs.

6. Your top priority is company culture.

Most entrepreneurs set out to create the kind of company they want to work for. Many accomplish that by building a strong culture that unifies everyone as part of a greater vision. That culture can also help businesses attract and retain top talent — and gain an edge on the competition.

It’s widely agreed that company culture has a significant impact on a business’s bottom line. Clear feedback and reward systems, a positive working environment and career development opportunities all contribute to less turnover and happier, more productive employees. But as a busy business owner, are these areas where you can personally devote enough attention?

If you’re looking to boost morale, increase productivity and attract prospects who will help you achieve your vision but don’t have the time to do this effectively yourself, it may be time to bring in an HR professional. At the very least, make sure someone (other than you) is responsible for protecting the culture you set out to create and is strategically developing it alongside you.

7. Your worries are the only thing holding you back.

Let’s say you’ve determined that hiring an HR professional is both necessary and cost-effective, but something is still holding you back. Hiring an outsider to develop and manage your team and culture can feel like dropping your kids off at day care for the first time. It requires a tremendous amount of trust. If you’ve held the reins for a long time, it’s natural to be apprehensive about handing them off. However, the benefits of delegating

HR responsibilities are worth the investment

Employees are most effective when their skills and interests align with their responsibilities. A business owner is no exception. If you stick to your strengths and trust HR tasks to others with the talent and time to see them through, you’ll be a more effective leader. It’s thrilling to have grown your business to the point where you can bring on help to manage your team. Celebrate that success with an investment in your most important (human) resources and you’ll be set up to thrive in the face of any personnel challenges that come your way.

How to hire your first HR person

If you’re ready to take the plunge, take the time to recruit an HR professional who meshes with your company culture. Go slow and be picky. In the long run, fast hires often go poorly for everyone involved. 

Here is a step-by-step process for hiring your first HR person: 

  1. Assess your HR needs: What HR tasks do you need help managing and what processes do you currently have in place? Understanding what you need in an HR professional will help you define the role and find the right person for the job. You want a team player who will keep your vision front and center but won’t be afraid to challenge the status quo. Of course, you also want someone qualified and experienced in personnel management.
  2. Write an accurate and compelling job description: Although you’re probably not an expert at writing job descriptions (notably, that’s typically someone an HR person handles), you will want to craft a compelling job description that conveys the job role and responsibilities as well as your company culture, values and benefits. 
  3. Advertise the role: Post the job opening and its description on various job boards, social media sites and your website’s careers page. Seek recommendations from your professional network and employees. Casting a wide net can help you find a bigger pool of qualified candidates.
  4. Screen and interview candidates: Review resumes and conduct phone screenings and interviews to determine the best applicants. Using strategic HR interview questions can help you evaluate HR knowledge, cultural fit and analytical and soft skills.
  5. Conduct background checks. Conduct any necessary background checks you may need. This can include checking references. Based on the results of this step and the preceding one, identify your top applicant.
  6. Make a job offer. Make an offer to the best candidate — and be prepared to negotiate. Understanding industry standards for things like compensation and benefits can help you craft a competitive offer.
  7. Hire and onboard your HR person. Once you’ve made an offer and this HR person has accepted it, you will need to onboard them. To ensure the smoothest transition, employ a comprehensive onboarding process that arms your new hire with proper training, tools and mentorship. As your new in-house HR professional, they can then evaluate this experience and improve it for future hires.

Once you’ve got your HR person up to speed, get ready to spend your reclaimed hours on other high-value business endeavors.

Alternatives to hiring an HR person

If you’re not quite ready to hire an HR person today but still need some help with HR, there are a few alternatives available. For example, you may be able to hire a contractor or nondedicated employee to help with some HR functions. This can be a temporary fix but shouldn’t be seen as a long-term solution.

Another more popular option is to outsource to a third-party HR service provider. There are two primary outsourcing solutions: a professional employer organization (PEO) and an HR outsourcing (HRO) service. Highly rated HRO services are great if you want to outsource a few specific HR functions while top PEO providers are ideal for smaller organizations that want a full-service provider to take on their HR responsibilities through a co-employment model

Each of these alternatives has its own pros and cons, so weigh each option carefully.

Mark McKee contributed to this article.

author image
Skye Schooley, Senior Lead Analyst & Expert on Business Operations
Skye Schooley is a dedicated business professional who is especially passionate about human resources and digital marketing. For more than a decade, she has helped clients navigate the employee recruitment and customer acquisition processes, ensuring small business owners have the knowledge they need to succeed and grow their companies. In recent years, Schooley has enjoyed evaluating and comparing HR software and other human resources solutions to help businesses find the tools and services that best suit their needs. With a degree in business communications, she excels at simplifying complicated subjects and interviewing business vendors and entrepreneurs to gain new insights. Her guidance spans various formats, including newsletters, long-form videos and YouTube Shorts, reflecting her commitment to providing valuable expertise in accessible ways.
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