Most small businesses have questions surrounding HR such as…
When should I hire an HR professional?
Do I need a full-time or part-time HR professional?
Should I outsource my HR?
As your business starts to grow, you should consider developing some type of HR function in order to ensure that your startup is conducting business legally when it comes to staffing, benefits, and the touchy areas such as firing or letting go employees.
There are several options for startups when it comes to HR and choosing the best one for your company can affect your bottom line:
Full-time HR Professional
Many startups immediately think that they need to hire a full time HR professional in-house. While this could be the best option for some startups, it’s not necessarily the best option for your startup.
My observations, from a previous experience is that there isn’t always enough to keep a full time HR professional busy in a small startup. Many times you may find that the individual is not engaged and is underutilized. However, having a full-time HR professional does allow you the flexibility to have an HR expert on hand whenever needed. One thing you must take into consideration when considering hiring a full-time HR professional is whether your startup has enough HR needs to justify paying a salary for 40 hours a week.
Part-Time HR Professional
Another option, when hiring an HR professional in-house is to consider hiring a part-time expert versus a full-time. This means that you will cut your cost in half, while still obtaining the expert advice and knowledge that is important to your company’s success.
If you have a sister or parent company that your startup is associated with, consider sharing an HR expert. I have worked for a startup in the past where this was a great cost-saving solution, offering our company access to an expert when needed.
Outsourcing HR Functions
Many companies have started to see the benefit of outsourcing their HR to a Professional Employer Organization (PEO). Business News Daily points out many of the pros to outsourcing such as:
- Legal protection
- Larger selection of benefits
- Ability to handle remote employees in different states
- Ease of access
Depending on the company that you select, outsourcing your HR functions can be very streamlined, allowing you the ease of having the expert knowledge while also being able to concentrate and focus on your startup. This option also eliminates the need of hiring additional HR staff as your company grows, saving your startup money in the long-term.
However, there are some cons to outsourcing your HR. Business News Daily mentions that giving up all of your HR functions to a PEO will limit your control when it comes to HR decisions. Typically, small business leaders are accustomed to being very hands on and involved when it comes to different functions of the business. While outsourcing your HR department will allow you more time to focus on the business itself, it can be difficult for some owners to step back and become less involved in certain areas of the company. When the PEO makes changes to benefits or policies, there is little that you will be able to do.
In addition, utilizing a PEO is less personal than having your own HR professional or expert onsite. When you or your employees have questions, you may speak to a different person each time when calling to the PEO. Some PEO’s will have an assigned employee to work with your company. However, you have no control over that person’s happiness or satisfaction with their job, nor their job performance. The personal touch of having your own in-house expert is lost when using a PEO.
All in all, whether you decide to hire direct or outsource your startup’s HR functions depends on what works best for you and your business. I will say that based on my research, outsourcing seems to be less of a headache, saving you time and money. However, perhaps in the beginning stages of your startup, the best option would be a part-time professional until you have reached a decision to hire full time or outsource.
What has your experience been with your startup’s HR needs? Please share your experiences below.