How do we bring employees back to the office safely– and what if some employees don’t feel comfortable returning?
What if we need to furlough employees– what’s our process for this?
How do I keep employees engaged and motivated when we work from home?
These are just a few of the questions small and medium-sized businesses (SMBs) have researched online in the first half of 2020. Of course, Googling your way to an answer is very different than having a dedicated HR professional who will map out a comprehensive, strategic solution. In a time of ongoing uncertainty, these challenges underscore the importance of having an HR leader on your team. The benefits of this in-house expertise are not limited to resolving compliance concerns. A strong HR leader is essential to maximizing your company’s greatest asset: your people.
When Should an SMB Hire Its First HR Professional?
Over the years, I’ve spoken with many SMB leaders who see the long-term value in building a human resources function but aren’t sure about the timing for their first HR professional. I understand: when you’re fighting fires every day to grow your business or stretching the budget to do more with less, it can be hard to see the urgency in a “back-office” hire like HR. This thinking is part of an outdated yet persistent belief that HR is a cost center, not a revenue generator. That it’s the realm of tactical thinkers not strategic leaders, a place for managing paperwork and payroll. The reality is that having an effective HR professional on your Leadership team provides a unique skillset and perspective that will increase revenue for your organization. Continuing to see HR as just a place to hire, pay and avoid compliance issues could be holding back your company’s potential.
These are three common beliefs around HR hires that can limit SMBs, and how to know when it’s time to make your first hire:
The belief: “We’re still in the startup phase. We need to fill other roles first.”
The reality: Would you start a company without having expertise in accounting and finance? What about sales, marketing or operations? These roles are seen as vital, yet the role responsible for your company’s greatest asset––your people––is an afterthought.
Smart companies invest in HR early. The right HR leader will help your company determine the knowledge, skills and abilities (KSAs) that current and future employees need to have, streamlining the hiring and onboarding process. They’ll help you develop policies, practices and procedures that drive employee performance at all levels, directly impacting business success.
The belief: “Right now, it’s just too expensive to hire someone just for HR.”
The reality: A common refrain from SMBs is that a dedicated HR professional will cost them too much money. In reply, I ask them to consider the costs of what a strong HR professional can help mitigate– costs they may not realize they’re already paying.
For instance, what’s the cost of a bad hire or turnover? Conservatively, replacing an employee costs one-half to two times the salary of the departing person. Now, consider this expense compared with the cost of adquately compensating top talent, creating learning and development opportunities for them, and providing strong employee communications that keep employees engaged and productive. Rather than paying to replace a high-performer, you could have been investing in that high performer’s future with your business. That’s what an HR professional helps you do.
What about poorly negotiated benefits terms? Or paying fines and settling lawsuits because the company broke federal, state, or municipal employment laws? An HR professional recently told me her company was facing a $16 million lawsuit from the Equal Employment Opportunity Commission when she started working. Thanks to her experience and smart thinking, they ended up settling for $100,000.
We all know it is less expensive to do things right the first time, than redoing them after the fact.
The belief: “HR is fluff, only meant for keeping people happy.”
The reality: While some companies think HR is just about compliance and paperwork, others think HR focuses on “fluffy” employee engagement events, like organizing trust fall workshops or team lunches. This couldn’t be further from the truth. High turnover, stagnant productivity, unexpected remote work. Without HR, managers would be left to deal with these challenges on their own. HR leaders are problem solvers, project managers, communicators and trainers with cross-departmental impact.
While many other business functions work primarily in silos, HR leaders have insight into your entire company. This holistic view makes it easier for them to connect the dots between employer branding, employee benefits, talent recruitment and employee retention. For many SMBs, an HR leader is the first person to optimize these efforts across departments, creating a coherent, company-wide strategy.
When to Make Your First HR Hire
The question to ask is not can you afford an HR leader but can you afford to not have one? Could your business benefit from a streamlined recruitment and retention strategy? Guidance for tricky situations like long-term remote work or furloughing employees? A plan for keeping employees engaged, productive and motivated in uncertain times? A talent retention strategy that avoids the high costs of replacing a star performer?