When Does a Small Business Need HR? | HR Excellence Consulting

Quick Answer

There isn't one magic number of employees that determines when a business needs HR help.

Some businesses need HR guidance when they hire their first employee. Others begin looking for ongoing HR support as they approach 10 employees or as managing people becomes more complicated.

A better question may be:

Have your HR needs outgrown the way you're handling them today?

If employee issues are taking more of your time, managers aren't sure how to handle situations, policies haven't kept up with your business, or HR responsibilities are falling to someone who doesn't have the time or expertise to manage them, it may be time for HR support.

1. HR Is Taking Too Much of Your Time
You're spending more time answering employee questions, handling paperwork and resolving workplace issues—and less time running the business.

2. Your Office Manager Has Become Your HR Department
They're doing their best, but increasingly complex employee situations require knowledge and experience beyond everyday HR administration.

3. Managers Aren't Sure What to Do
Performance problems, attendance concerns, employee complaints and difficult conversations are being handled differently—or avoided altogether.

4. Your Employee Handbook Hasn't Kept Up
Your business has changed, but your policies and handbook haven't changed with it.

5. You're Growing
You're adding employees, managers, locations or employees in other states, and the informal processes that worked when you were smaller aren't working anymore.

6. Hiring and Turnover Are Becoming a Problem
Positions are harder to fill, new employees aren't staying or good employees are leaving—and you're not sure why.

7. An Employee Situation Is Keeping You Up at Night
There's a complaint, performance issue, leave question, termination or other situation and you're worried about making the wrong decision.

8. You're Saying, “I Think We Should Probably Have HR Look at This.”
That may be the best sign of all.

Yes, you can need HR help even with a very small team.

Hiring your first employee introduces responsibilities involving payroll, employee records, policies, workplace expectations and other HR considerations.

That doesn't necessarily mean you need ongoing fractional HR support.

You may simply need help creating an employee handbook, setting up HR technology, improving onboarding, addressing an employee issue or making sure your basic HR processes are in place.

Every organization needs HR. Not every organization needs a full-time HR employee.

As your business adds employees, HR often becomes more complicated. The informal processes that worked with five employees may not work as well when you have 15 employees, multiple managers, another location or employees in different states.

As you grow, you may start asking:

Hiring & Onboarding: Are we hiring the right people and giving new employees a strong start? → Hiring, Onboarding & Employee Retention

Policies & Compliance: Do our handbook, policies and HR practices still reflect our business? → HR Compliance & Employee Handbooks

Performance & Managers: Do our managers know how to set expectations, give feedback and address performance concerns? → Performance Management & Manager Support

Employee Relations: Who handles complaints, difficult employee situations or workplace investigations? → Employee Relations & Workplace Investigations

Compensation & Benefits: Are our pay and benefits practices keeping pace with our workforce? → Compensation & Employee Benefits

HR Technology: Have we outgrown spreadsheets, manual processes or our current HR system? → HR Projects & Technology

And what if all of these are starting to happen at once?

As a business grows, HR needs don't always fit neatly into one category. If you're regularly dealing with hiring, employee questions, manager issues, policies, performance and other HR responsibilities, it may be time to consider ongoing support.

Explore Fractional HR Services →