HR departments have shrunk at companies across the United States.  According to a study by the Society for Human Resource Management (SHRM), the head count at the average HR department fell from 13 in 2007 to just 9 in 2008.  Many small businesses will employ a dedicated “human resources manager” to handle payroll, any employee issues/questions and the interviewing of candidates, but, in many cases, companies sporting 50 or fewer employees will not support this position at – much less a formal HR department.  Typical HR functions are simply pushed out to the different department heads.

However, this can cause many problems, including a greater potential of lawsuits due to the dissemination of inaccurate information.

Is there a magic number of employees that a company needs to have before the decision is made to hire an HR manager?  Again, companies with less than 50 employees rarely have a formal HR department, but there is no “magic threshold” of employees that are needed in one location before the decision is made to hire a dedicated HR manager.   Instead there are certain, specific business reasons that would dictate the decision to bring someone on board.

1)       You are embracing a continuous staffing model, either due to growth, expansion, seasonality or turnover.  Growth can cause issues in quickly hiring and on-boarding the right staff.  Without an in-house HR point person, you may not be able to develop the most effective staffing, development and retention strategies.

2)       Employee relations issues are on the rise, and you are worried about litigation or a lawsuit.  Critical mass due to perceived or actual legal risk of lawsuits can hit different companies at different times and for different reasons.  If there is fear of any of these issues surfacing, then it is time to hire a dedicated HR manager.  Having an HR manager means that you are much more likely to run your company above board, which will save you time and expense, if it becomes necessary to terminate an employee or are faced with a CCMA dispute. 

3)       The staff resources or outside consulting resources consumed on HR-oriented tasks exceed the cost of hiring one.  Analyze the costs for the past year and also evaluate the potential benefits of taking these services in-house.

4)       Policies and benefit programs are being re-engineered or have become disorganized or outdated.  You may have a compensation and bonus plan in place that fails to reward the desired behaviors needed for your environment. Or you may have policies or benefits in place that are not flexible enough or no longer make sense.  Or you might need to write and/or update an employee handbook. These or similar circumstances may provide a strong argument to justify hiring HR talent.

These are just some of the factors to consider.  Remember, it is not just a matter of hiring an HR manager; you must hire the right HR manager.  Identify your mission and your goals (both long-term and short-term) and then work with your local Snelling office to find the right person to help your company grow.