Does your California small business need an HR manager?

Posted March 24, 2021

Many small business owners and startups are used to ‘wearing many hats’, meaning you are caught juggling and handling many business activities (sales, marketing, accounting, managing employees, contracts, etc) yourself. Which also would include Human Resources (HR) duties. Your employees are your greatest asset, so it is important they are properly managed and taken care of. One way to facilitate that is by employing a qualified human resources manager. According to data from a recent article in SBA Hartford, 54% of small businesses handle HR in house. Unfortunately the HR work sometimes gets delegated to staff who have very little experience with the practice of managing employees.

According to a survey from SHRM, 81% of those small business employees aren’t confident in their HR skills. And only 20% trust themselves not to make costly mistakes.

If you own a startup or small business that has 20 employees or more, it’s not good enough to hand off the HR tasks or duties to someone in operations or finance. The SBA Hartford article suggests it would be beneficial for you to create an HR department that can improve employee experience and free you up to focus on making your business grow.

Make your Company better with HR for Small Business

According to an article in Business.com, “whether your team simply grows into needing an HR manager or you are legally obligated to hire one, an HR manager does more than just manage payroll and employee benefits; they can keep your business compliant with regulations and shape your company culture.”

HR professionals are trained to handle HR issues, including employee relations and motivation. Your own HR team not only helps you follow employment law; it ensures the health and safety of your staff.

Your HR team can develop policies that lead to employee well-being and engagement, too. The employee satisfaction that HR managers help you create is crucial for small business and early stage startup success.

What Exactly is the Role of a HR Manager?

A human resources manager works with senior managers and business owners to design and implement people strategies and ensure your organization has the right team in place.

A great HR manager does more than just administrative tasks (e.g., payroll, benefits, employee safety, company compliance), they also help maintain organizational and employee development (e.g., recruiting, hiring, employee-employer relations, employee growth, company culture). They can help you create conditions where staff thrive. That can make your employer brand strong. Here are some typical roles your HR department will play.

Ensuring Compliance with California Employment Law and Mitigate Risk

Having HR makes sure your business obeys all local, state and federal employment laws. That includes handling I-9 documents that prove U.S. citizenship for each employee. But HR also tackles labor laws. Those include the Family and Medical Leave Act, Americans with Disabilities Act, and the Fair Labor Standards Act.

They maintain employee files, too, making sure all paperwork is always in order. Some paperwork you’ll need on your staff includes resumes, proof of education and training, work reviews, and tax and medical records.

You’ll need more documentation if your employees have disabilities or other special needs. Letting your HR team handle these issues helps your small business avoid costly legal problems.

Hiring & Retaining New Employees

Great employee experiences begin with the hiring process. HR works with you to manage hiring new employees. They create methods to attract and recruit the best talent for your business. This includes:

writing job descriptions
ad placement
resume and application gathering
interviewing and reference checks
job offers

The role also includes managing layoffs and terminations. These procedures have employer regulation implications that HR staff know how to meet.

They also know when to hire others skilled in areas like hiring temps or technical labor.

Employee Training & Development

A positive employee experience goes beyond hiring. How your company onboards, trains and develops employees are key to employee retention. These activities also build your brand reputation as an exceptional employer.

HR implements practices and procedures and develops employer-specific resources. They put the best orientation, education and training, and career planning tools in place. They also bring in the right professionals to help. This ensures employees get what they need to stay happy and productive at work.

Employee Compensation & Benefits

(image credit: early to rise)

This is another area, if not done professionally, that can lead to regulatory woes for small business owners. HR personnel are experts in handling employee compensation and federally mandated employee benefits. These also include fringe benefits, like gym memberships and tuition reimbursement. HR manages all important tasks related to paying employees. This includes

employment taxes
Unemployment insurance and Workers’
Compensation insurance.

HR works with outside specialists on different aspects of employee compensation and benefits. This can include timekeeping, payroll, life, health and disability insurance, and retirement planning. They also manage the costs of payroll and benefits, taking those tasks off your busy hands.

Creating and Updating Employee Handbooks

Your employee handbook is critical to managing staff and avoiding costly litigation. It’s where you share your firm policies, practices, and procedures in writing. Besides your code of conduct, the handbook should also cover important rules. Some examples are diversity and anti-discrimination, sexual harassment, hiring, discipline and complaint reporting methods.

This worker’s playbook answers staff questions and helps prevent misunderstandings. It’s also a tool to communicate your company’s mission, vision and core values. HR can manage your employee handbook if you have one or help you develop the all-important tool if you don’t.

Handling Performance Reviews

(image credit: Culture Amp)

One stressor that small business owners experience is conducting performance reviews. HR helps remove barriers to positive employee relations by overseeing this function. That includes employee evaluations, annual reviews and exit interviews.

The extent to which they handle this depends on the size of your business. But HR personnel are authorities in determining what those measures should be. They can conduct this process in a way that preserves a positive employee experience, too.

For example, HR can give employees tools and training to improve performance and productivity. HR also helps you track staff’s professional advancement, so your employees grow. This helps with retaining the best talent.

Help increase Employee Satisfaction and Retention

One way to increase employee development and workplace satisfaction is another benefit of having an in-house HR manager. An HR manager can help build career paths and employee growth strategies that keep employees on track to reach their goals. This can increase employee satisfaction, which increases productivity and employee retention in turn. A positive employee experience includes a focus on employee engagement and well-being. It comes from creating a positive culture that tackles each employee’s unique professional needs and personal challenges.

Onboarding and Exit Interviews

Hiring talented people into a firm where the focus is employee happiness and creating a diverse, fair, inclusive, culture is only the beginning. Bringing them into your company with structured onboarding is a key retention strategy. Great onboarding leads 68% of employees to stay at companies for over three years.

Businesses with standardized onboarding experience 50% higher employee productivity. New employees who feel welcome and have the tools they need to succeed are more productive.

HR should focus on four elements, listed from least to most effective:

Compliance — informing new employees about your legal and company policy.

Clarification — making sure new hires understand their job duties and manager expectations in their role.

Culture — sharing company values and norms to help new employees adapt.
Connection — introducing new hires into information networks and helping them make friends with others at work.

Engaging employees in strong onboarding programs leads to less employee attrition. But when employees leave your firm, HR should conduct exit interviews. That helps to determine what retention strategies your firm might have used to keep them.

How Does a Business Owner Set Up HR for a Small Company?

It’s important you build your HR team based on the needs of your business and industry. This will ensure your HR professionals have the right skills to manage your staff and unique business issues. You also want your HR staff to have exceptional people skills. Whether you put HR on your payroll or outsource the function, here are tips for getting it right. The SBA Hartford article listed a few steps that could be taken to accomplish this.

1 Hire an HR Professional

Obviously there are a few factors to consider, such as your company’s size and revenue, but if you have the budget it might make sense to hire an in-house HR manager.

By doing this, you will have control over hiring, retention, benefits, company culture, and internal communications. Bear in mind, it is sometimes difficult to find one person to handle all of these things. You may need to hire a small team eventually.

If your small business has under 50 employees, it may make sense to hire a HR generalist to save money. Then this person can outsource certain tasks to vendors that use software to automate them. This can include compliance, payroll solutions, benefits and onboarding.

Remember there is one size fits all solution for how many HR professionals you need to have on staff based on how many employees you have. A restaurant has different needs from a software technology startup firm or biotech company etc. So, a consultant can best help you find the HR experts your business needs.

2 Outsource Your Human Resource Management

When you need some help, but not full-time, consider using an HR outsourcing provider to handle some of your HR responsibilities. It also may cost less than hiring full-time employees and still give you the expertise you need. You only hire the help you need for a specific task, like recruitment or benefits management. Consultants give you access to a larger talent pool, too.

But you don’t always get full control over your HR with this option. Outsourcing HR can help save you time and money and can take the worry out of certain areas of compliance. You can choose to outsource some or all day-to-day administrative duties across HR, talent management, payroll, benefits, and more.

Take administrative HR tasks off your plate and free up time to focus on strategic business goals, like employee retention and development, or corporate culture.
Reduce time spent answering employee questions and dealing with issues.
Save money on hiring additional HR personnel.
Reduce onboarding and training costs.
Receive support for compliance with employment laws and regulations, workplace safety, payroll and tax, and more – potentially saving your business from compliance fees and penalties.

3. Use an HR Software

HR software can automate tasks to keep small business owners organized and efficient. Some HR apps for small business can make you feel you have a full staff of HR management. Many HR software programs and apps help you hire, onboard, train, pay, document and dismiss employees.

Remember, as you grow, you’ll have an increasing number of employees to manage. Using software and apps alone will not be easy. So, use some strategies above to get the help you need at that point.

Conclusion

When should a small business or startup company hire an HR manager? The answer to that question is it depends. In some cases, you are legally obligated to hire an HR manager once you have a certain number of employees. According to the Business.com article “once the organization gets above 15 employees or so, it should consider at least a part-time HR manager; certainly at 50 employees and above, it becomes far more necessary.” Not all HR managers perform the same functions, so you will need to identify what you want them to do. For example, do you want them to focus solely on risk, compliance and payroll, or do you want them to have extensive experience in recruiting and fostering company culture? Bottom line is that California employers need to be aware and in compliance with California employment laws. There are several new 2021 California employment laws of which employers must be aware, as they may affect daily business operations, policies and employees.

Huckabee CPA sometimes gets requests for payroll services from small businesses, although we don’t offer standalone payroll processing, we do provide packages to clients that are combined with monthly bookkeeping and tax services together. Running a small business is not easy, but we’re here to help. If you have any questions feel free to contact Huckabee CPA for a free consultation.