Do you need a Human Resources Department?

The easy answer to this question is, if you have employees, you need HR, however it’s not that simple when you are a small or smaller business.  The reality is, as soon as you have employees, you have compliance requirements.  You need posters, you should have a hand book, you need to have payroll.  It is very complex and overwhelming, which is why so many business owners decide it’s just easier to hire Independent Contractors.  Beware of this trap, as it’s only easier until you get audited and after that it is unimaginably unpleasant.  But the truth is, if you are small or just starting out, it probably isn’t feasible to have a dedicated HR person.  A lot of times, the business owner will take on this role his or herself, or they will have an all-purpose administrative person who handles all the business’s paperwork.  This is actually a pretty good solution, provided you have a way to know what your compliance requirements are.  There are resources to help you.  You can go right to the source, such as the Department of Labor ( to learn different laws.  The problem is this can be a bit confusing, since there are State and Federal laws and it’s not always easy to tell which take precedence when they are different, however an easy rule of thumb is to do whichever is more favorable to the employee and least favorable to the business and you are probably okay.  Another option is to outsource your HR.  Here, you also have options.  You can utilize a labor attorney to assist you.  With this option you will be assured that you will have legally compliant policies.  The downside is it is very expensive and you will want to make sure you choose an attorney who specializes in labor compliance or you will spend a lot of money for them or their paralegals to do research on your dime.  You can also use a large consulting firm.  These are also safe options.  The downside here is that you may pay for services you don’t need, you often have less flexibility in service offerings, they can be expensive and are often impersonal.  A smaller boutique firm can be a great choice for a small business.  If you go this route, make sure you pick someone who is a good fit for your culture and who has the experience required to meet your needs.  Ask about the types of things they’ve handled and make sure they will be available to support you.  At the end of the day, you have a lot of options and no one choice is right for every business.  

By Carrie Maldonado

Carrie Maldonado, is an organizational development consultant, author, and speaker. Carrie's eclectic mix of professional interests include writing, speaking, coaching, and consulting on topics ranging from organizational behavior management to spiritual transformation in and out of the workplace. Carrie lives in the beautiful Pacific Northwest with her patient and long-suffering husband and their three children.

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