The consensus among HR leaders is that once you’ve reached the 20-employee mark, it is definitely time to hire a dedicated HR professional. If your business continues to grow, you’ll likely need to expand your HR department.

As businesses grow, the complexity of managing human resources increases, necessitating a strategic approach to recruitment, compliance, and employee engagement. Recognizing the signs of small business HR growth early can set the foundation for sustainable expansion, ensuring the business is well-equipped to handle new challenges and opportunities.

What 5 Considerations Should You Consider During Small Business HR Growth?

Consider the following to handle your small business HR growth.

1. Timing

Before you implement growth measures for your HR department, verify that now is the right time. Your small business is flourishing, but how long has this growth spurt been under way? And how sustainable is it? Before you make any hiring decisions, consider the pacing of your small business HR growth.

If your revenue forecasts are good and there’s a clear need to boost your headcount, then it’s time to expand your HR department.

2. Subtle Indicators

Hard dollar signs aside, look for other (subtler) indicators that your HR department needs expanding — such as the following:

• You’re having trouble staying compliant with applicable HR laws.
• You’ve been penalized by the government because of noncompliance.
• Your HR team is stressed out or burdened by their workload.
• Employee morale has dropped because of insufficient HR support.
• You’ve outgrown your current administrative HR processes and systems.

3. HR Needs

To understand what to implement during the time of your small business HR growth, you must break down your HR needs, see how they stack up against your budget and prioritize accordingly. During this process:

• Examine your current and foreseeable HR responsibilities, including recruiting, hiring, onboarding, compensation, health and safety, employee benefits, payroll, time tracking, performance management, training and development, regulatory compliance, and employee relations, retention and termination.
• Review the methods you use achieve your HR obligations, such as manual versus technology-assisted processes and external vendors.
• Note the new processes and employment laws you must adopt as your business grows.
• Identify HR areas needing additional personnel.
• Estimate how many HR people you need and to what extent (such as full-time or part-time employees). Per the Society for Human Resource Management, small businesses with 1–250 employees often have an average of 3.40 HR people for every 100 employees.
• Determine job titles, duties and qualifications for your HR staff.

4. Strategy

Overhauling your HR function to accommodate your small business HR growth, including a larger team and a more formal structure is a complex venture that should be executed in a strategic manner. Be sure to seek stakeholder input, including from managers, employees and business partners, to ensure a thoughtful, organized transition.

During strategy discussions, all options should be on the table, including determining the most accurate, cost-efficient and secure way to manage your entire HR function.

The topic of in-house HR administration versus outsourcing is likely to come up. And when it does, you’ll have to decide whether it’s smarter to administer HR fully in-house (meaning with your own resources) or to outsource a few or most HR duties.

Adapting HR Functions for Scalable Small Business Growth

As your small business embarks on a growth path, each HR function must evolve to meet expanding needs.

• Recruiting and Onboarding: Streamlining these processes with scalable solutions ensures a smooth integration of new talent, which is critical for sustaining growth.
• Compliance: Staying ahead of regulatory changes is vital. As your business grows, so does the complexity of legal compliance, making it essential to adopt flexible strategies that adjust to new laws.
• Employee Benefits and Payroll: These systems must scale with your workforce, requiring robust solutions to handle increasing data and complexity without compromising accuracy or employee satisfaction.

How can BlueStone Services’ human resources consulting solutions help?

If you still have questions about effectively managing your small business HR growth, BlueStone’s human resources consulting solutions were created to provide long-term outsourced human resources support or HR project-based support for small to midsize organizations. Click here to contact a BlueStone representative if you need an experienced HR consultant to help you nail down appropriate solutions and assist with strategizing.

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