Delegating HR for a Small Business

This is a First Look at a column to appear in the September 2019 issue of
Water Well Journal

It’s critical your company’s HR is in the right hands.

By Alexandra Walsh

As small businesses keep hiring, many owners discover being a do-it-yourself human resources manager is the wrong job for them.

According to a study in 2017 by Automatic Data Processing Inc., 70% of HR workers in companies with 49 or more employees don’t feel as though they have been properly trained or are ready to take on HR duties. Some 23% of the time, these ad hoc HR managers fill roles including office administrator and chief operating officer, while 12% work in finance.

Though these people spend 20% of their time on workforce issues, 81% of them aren’t confident in their HR skills, and 82% have no formal HR training. Only 20% trust their abilities to manage HR “without making a mistake” according to the study.

Not surprisingly, a survey by the payroll service Paychex found that less than 50% of small-business owners are very confident about the way their companies handle HR as well.

Human resources tasks which can include complying with government labor laws and regulations, handling disciplinary problems, and administering employee benefits are no different from chores like keeping the books that many owners could hand off, but don’t.

Many owners are forced to get HR help when something goes wrong.

When to Delegate

Many owners realize they need help when faced with the multiplicity of employment laws and regulations at the federal, state, and local level. Employers must comply with laws related to pay, working hours and conditions, benefits, disability, discrimination, and harassment.

In a growing number of states and municipalities, workers must be allowed to accrue paid sick leave. If they are government contractors, there are additional requirements such as a higher minimum wage than the general federal minimum rate an hour.

Many owners are forced to get HR help when something goes wrong, such as an owner missing a deadline for paying payroll taxes or filing required documents with the government.

The Society for Human Resource Management (SHRM) suggests businesses require some kind of HR function as soon as they hire their first employee. But beyond basic concerns such as running accurate payroll and following the law, small companies depend on their owners for success in ways that go far beyond administration.

The sheer pace of business and turnover are also factors in deciding when an owner should delegate HR.

According to SHRM, small-business HR practitioners, owners, and consultants agree the time to begin delegating HR usually occurs sometime around the hiring of employee number 10.

However, they don’t base that estimate on any kind of formula. Rather, they say, it’s around this time that an organization’s leaders discover their time can be spent more advantageously on other things.

Put It in Writing

The process of delegating begins with putting everything in writing. All tasks that need to be accomplished should be written down, which can help prioritize responsibilities when viewed. You can quickly glance over your notes to get a clear picture of where your time, profits, and energy are being spent.

Time really is money, and there is not much room for wasting even seconds. Begin to track time spent on projects and then analyze what is productive and what is not.

Assign Duties

The final step in delegating is to determine who is able to perform the necessary tasks in the most time- and cost-effective manner. If there is already an employee within your company able to take on the duties associated with human resources, now is the time to craft their new job description. But above all, make sure the new HR employee is adequately prepared.

Once a decision to delegate HR has been made, many business owners make the mistake of assigning subordinates based on their role rather than their abilities.

Unfortunately, they pick people who are no more qualified than any other manager in the office—rather than finding someone who can keep everything confidential, be administratively organized, and most importantly be an empathetic listener and guide for employees.

Especially in a small company, the HR person has to be a “people development” person, so it’s important for a small company’s HR person to have good people skills as well as an appreciation for small business.

  1. There are basically three ways to delegate human resources responsibilities: Select individuals within your company and redirect their job descriptions.
  2. Contract outside your company with a business that specializes in outsourcing HR departments.
  3. Delegate to either in-house or outsourced workers, but use software and other helpful tools to automate and streamline some of the human resources functions.

Training for HR

Picking the right person means identifying the person with the right potential—and then training that person.

HR requires considerable knowledge, and one of the worst mistakes a business owner can make is to give HR responsibilities to someone who doesn’t have at least some education in the basics.

For help, small businesses have many resources they can use. Many states offer courses and technical assistance. Businesses can turn to information from the Society for Human Resource Management website to stay on top of current trends and regulations.

Besides conflict resolution, emotional intelligence and looking at issues from multiple vantage points—the organization’s view and the employee’s view—are also important HR skills.

Training shouldn’t be limited to those designated to handle HR. For example, in smaller companies the key people at the top are doing the hiring. That means they need to have some training, too. Administrative tasks can be delegated, but some things remain with the owners.

Business owners aren’t finished once they’ve named a point person for HR. An organization’s needs change as it grows and adds increasingly complex jobs.

It’s important to reassess HR needs every year or so. If the company adds several people over the course of a year, it might be time to move HR responsibilities beyond the office manager and consider whether outsourcing would be a cost-effective solution.

There are outsourced businesses that can handle tasks such as payroll services, managing benefits like health coverage or 401(k) plans, employee assistance programs (EAP) or counseling, training, employment-related legal compliance, and background screenings.

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There are several resources out there for business owners considering their initial moves in HR. Talk to others in your industry. Find local HR groups. Talk to a trusted lawyer. Contact SHRM or an HR consultant.

And if you are looking for resources to support someone who’s just had HR added to their job description, be sure to include your new HR person in your strategic thinking.

An HR person who’s just doing the functional work is the wrong person for the job.

DACUM Codes
To help meet your professional needs, this article covers skills and competencies found in DACUM charts for drillers, pump installers, and geothermal contractors. DO refers to the drilling chart and GO represents the geothermal chart. The letter and number immediately following is the skill on the chart covered by the article. This article covers: DOK-2, 5, 14; DOL-1, 2, 3, 4, 11; GOI-2, 5, 14; GOJ-1, 2, 3, 4, 11. More information on DACUM and the charts are available here.

Alexandra Walsh is the vice president of Association Vision, a Washington, D.C.–area communications company. She has extensive experience in management positions with a range of organizations.