Whether it’s a brilliant idea that just has to go to market or the desire to have more control over your working life, small business origin stories are usually pretty clear. What’s often much less straightforward is the building out of the small business that your company has grown into.
Operations can tend to flow pretty smoothly and organically in the early days. But—especially when an excellent idea grows faster than expected—small business owners can find themselves struggling to determine when, exactly, certain core business elements need to be put in place.
Figuring out when to hire for human resources is a common conundrum that many owners face, so we’re here to help you think through it and figure out what’s right for you and your small business.
The 50-person rule of thumb
The most important thing to know about hiring for HR at your small business is that there’s no one-size-fits-all answer. Every small business (and small business owner!) is different. Some might feel most comfortable ensuring that HR is formally taken care of from the start while others might be perfectly fine handling it themselves for a while. There’s no wrong answer. It’s all about what works for you.
But if you’re not quite sure what works for you, one rule of thumb that many small businesses follow is this: Start investing in a formal HR solution around the time you grow to 50 employees or so, give or take.
One reason this has become a general rule is that many legal compliance regulations take effect once you reach the 50-employee mark. The Family Medical Leave Act (FMLA), for example, applies to any private-sector employer with 50 or more employees. The Affordable Care Act (ACA) is another federal law that sets in at the 50-person mark. Many states will also have more localized laws that set in at this stage, too.
So, as you get close to having 50 employees, it’s a good time to start thinking about HR, especially if managing the compliance around laws like these isn’t something you feel comfortable taking on by yourself.
Hiring for HR when specialization becomes needed
The 50-employee mark is a good rule of thumb, but it’s not a strict rule to follow. Another way to think about the need to hire for human resources is the point where your business starts necessitating more specialized roles.
Many companies begin with everyone wearing multiple hats in order to get everything done. At a certain point of growth, the work will often evolve to a level that requires dedicated, specialized employees, or teams of employees, to handle it. Reaching this stage can be another good indicator of the need to hire HR.
Job specialization is essentially a more clean and clear division of labor. It happens when workers perform more specific job tasks more expertly rather than doing many different tasks more generally. In the beginning of a business, for example, a sales manager might handle the hiring and onboarding of new salespeople in addition to managing the team and setting the strategy for growth.
When your business evolves to require more specialized roles, this kind of operation will likely be too much for one person to cover. It will likely make sense that your sales manager focuses on strategy and management rather than hiring and onboarding, which could instead be covered by an HR hire.
Software as an in-between solution
Hiring someone isn’t the only way to manage HR needs at your company. Today there are tons of software solutions that can help you stay compliant and organized without having to hire a dedicated employee or take on the tasks yourself.
Like all things small business, whether or not an HR software solution like Bamboo HR or Gusto makes sense for you is entirely up to you. If software isn’t your thing, there are HR consultants that can help keep your business compliant without having to make a hire, too.
Just remember—there’s no wrong answer! It’s all about starting with a clear understanding of your small business’s needs and finding the best HR solution for them.