How to Know When to Hire HR for the First Time
As an outsourced HR consultant, I regularly work with small businesses in need of support in Human Resources. Often these businesses are either in a start-up mode or have a small footprint and need part-time, efficient support to move their businesses forward. That work can sometimes be tactical, and sometimes strategic, and so hiring an outsourcing firm with a broad base of talented generalists can often be a great solution for a company which finds itself in this situation.
And in the words of the great Chinese philosopher Laozi, “Everything is temporary.”
As these organizations grow and change, they will need a different level of support. The question at hand is, “how do they know when to make the change?” As with many HR consulting firms, at Helios HR, we use a simple formula as a basis for recommending the addition of HR staff onsite and then narrow down for a more precise recommendation based on a variety of factors.
How Many Employees Should You Have for Full-Time HR?
First, we recommend a full-time HR Generalist for every 100-150 employees. This is a standard ratio many suggest. Where the real art comes to play is in determining the variables. Some of the areas to consider are:
- What is the complexity of your business? Is the business highly technical, or does it fall into an industry with strong regulatory and/or compliance requirements?
- Is your business fast-paced? Do answers and solutions need to come quickly, with short turn-around times?
- What work will fall under the position? Is the work strictly HR, or do other functions fall under it? Is there administrative support?
- What is the style of the leader? Does the leader require heavy support, or are they more independent?
- How much support do you feel the employees need? Are they dependent on HR to be available daily?
With each “yes” answer above, you may find your ratio is higher than the 1:100/150 recommended. We often see clients with 50 or more employees bring on a seasoned Generalist to manage the Human Resources function, and often those companies will combine the roles of that position with another (such as Office Manager or Payroll). Keep in mind, most HR Generalists are not payroll professionals.
One of the companies with whom I have worked, a small government contractor with 20 employees, knew they needed HR help and looked at options. Hiring an outsourced firm allowed them to have a seasoned HR professional available at the same rate as a part-time employee. Another benefit of outsourcing is that typically, a client has the reach back of the entire consulting team, which brings layers of thought leadership to solutions and recommendations, and it ensures the client will have a consistent resource available even in the event of a personnel change.
We also see companies like those mentioned above using HR outsourcing for point-in-time projects, such as compensation or training which often require specialized knowledge and experience, as needed to reduce the cost of bringing on another HR professional.
As you begin to add staff in the HR department, start with a seasoned Generalist who has broad experience across all HR functions. As you grow, consider adjusting your group to accommodate specialists across the various functions, keeping your ratio in mind.