(by Andres Rojas)
If you’re like 41% of small business owners who handle HR work by themselves, you probably feel like you’re ready to start an HR department. All those long days of you doing your company’s payroll and taxes will soon be a thing of the past for you.
We know adding a whole new department from scratch isn’t easy, so we compiled some key questions and answers that will make the process as seamless as possible.
How Many Employees Do You Need Before You Need An HR Department?
Despite being everywhere, the law doesn’t require that companies have an HR department. Still, as your business grows, your company will have to comply with an increasing number of laws, such as the:
- Family Leave Medical Act (FMLA)
- Obamacare (ACA)
- Title VII of the Civil Rights Act
- Equal Pay Act (EPA)
- State and local employment laws
Although a ratio of 1.5 HR staff members for every 100 employees is considered enough for most businesses, starting earlier than that is highly recommended. While the FMLA compliance starts at 50 employees, other labor laws – such as the Americans with Disabilities Act (ADA) – kick in as early as 15 employees.
Benefits of Having an HR Department
As your business grows, hiring specialists who can take work off your hands is a logical business move. Among other tasks, creating an HR department will free you from having to take care of:
- Payroll and benefit management
- Meeting open enrollment deadlines
- Hiring and onboarding new employees
- Performance management
- Employee training and development
- Time and attendance tracking
- Developing company culture and policy
- Legal compliance – taxes, safety procedures, etc
Delegating these tasks to a qualified HR staff means you’ll have more time for planning your business operations. This in turn translates into:
- Better qualified recruits
- Fewer employee lawsuits
- Higher employee retention rates
- Increased employee satisfaction
- Attractive employee benefits that meet market demand
In other words, the earlier you create an HR department, the easier that growing your business will be.
Who Should Hire Your HR Staff?
Hiring employees is a complex process that involves analyzing the market, managing budget management, and building an ideal candidate profile – among other tasks. It’s not as easy as publishing an online ad and hiring whoever made the first impression.
Your first step for starting an HR department, then, is hiring an expert HR manager who has the skills and experience needed to find and recruit top talent.
Your HR manager should have at least 3 years of experience (although 5 years or more is preferred), strong verbal and leadership skills, and an excellent grasp of federal, state, and local labor laws.
How Much Does It Cost to Have an In-House HR Department?
The costs of having an in-house HR department depend on many factors – office materials, internet and phone use, electricity, etc – but the biggest cost will always be your HR staff’s salaries.
According to the US Bureau of Labor Statistics, the average salary of an HR manager is $121,220 a year. And the yearly bill only gets higher the more you increase your HR staff.
Although secretaries, assistants, and other lower-level positions draw lower salaries, they still represent a substantial investment for many small businesses – especially because having in-house HR services isn’t always necessary nor cost-effective.
How Much Does It Cost to Outsource HR?
Unlike in-house HR, where HR staff are considered employees, outsourcing HR involves hiring contractors to provide a specific number of services, such as Zupnick & Associates own compliance and benefits management remote HR services.
Depending on the services you require and the number of employees in your company, outsourcing your HR tasks can cost anywhere between $45 and 1,500 a month.
This flexibility makes HR outsourcing a perfect fit for small business employers whose companies are growing but still don’t want the responsibility or costs that come with running a full-time HR department.
Outsourcing your HR will allow you to secure top talent, strengthen compliance, and improve employee relationships for a fraction of the costs of having an in-house HR department. So if you’re ready to take your company to the next level, contact us today.