Many small businesses start out as a one-person operation and it’s understandable that HR isn’t top of mind at that stage. But as soon as the business grows enough to hire its first employee, HR is suddenly necessary to handle the hiring and onboarding process, employee data, payroll, employee reviews and so much more.
Many business owners invest in HR software and attempt to manage the HR work themselves while the business is still small but as the business grows and hires more employees, new HR needs emerge such as how to keep employees engaged and handling employee complaints. When it comes to dedicated HR help, small businesses have a couple of viable options. The first is to hire in-house HR staff – starting with an HR manager and eventually adding to the HR team, as needed. The other option is to partner with a Professional Employer Organization (PEO), where HR services are provided by the PEO.
Top 3 Reasons Small Businesses Need HR
1. HR tasks and employment law
As the business grows, so do the HR tasks. By the time a business has more than five employees, HR tasks begin to dominate a workday and the risk of expensive errors increases. When you hire an HR manager or partner with a PEO, they take over these tasks so you can get on with running your business operations. You get the peace of mind that your business is in compliance with labor laws and protected from Fair Labor Standards Act (FLSA) lawsuits and complaints. In addition, your employees will be happier knowing that they work in a safe, clean and harassment-free workplace.
HR tasks include:
- Hiring
- Onboarding
- Training and development
- Termination
- Employee discipline
- Employee benefits
- Payroll administration
- Workplace safety
- Regulatory compliance
- Employee complaints and standards of conduct
2. Prevent expensive mistakes
There are many small businesses that have an employee handling HR tasks who does not have formal HR education or training. These employees are sometimes referred to as “ad-hoc HR.” The problem is that without the educational background, it’s incredibly easy to make a mistake that could cost the business money in lawsuits, time spent dealing with employee complaints and high employee turnover.
Common mistakes made by untrained HR representatives include failing to write an accurate job description, asking unlawful questions in an interview, not understanding which employment laws apply to your business and failing to properly document and address employee performance issues.
3. Employee files
When it comes to keeping files on employees, there are regulations in place to make sure they are handled properly. Many small business owners do not realize that they are required to keep three types of files on hand for each of their employees.
1. Form I-9 must be filled out to document verification of the identity and employment authorization of each new employee.
2. The employment file or employee personnel file contains information about the history of the employment relationship all the way from the employment application through employment termination documentation.
3. The medical file is part of an employee’s personnel record and stores documents relating to an illness, injury, or disability.
Businesses that fail to properly fill out and store these files, forms and information may face the risk of fines up to several thousand dollars. A trained HR professional knows all about the files and information you need to store and how long it needs to be stored.
Partnering with Makai HR
Not excited about employer laws? That’s okay; we’ve got you covered through HR outsourcing! When you partner with Makai HR you can get on with the business you are trying to grow while we take care of your employee needs from payroll to taxes, health insurance/benefits and worker’s compensation. You also gain peace of mind that you are compliant with all of Hawaii’s employer laws (if you’ve ever looked you know that the list is very long). When choosing a PEO to partner with, there are many things to consider including cost, services and technology solutions.
With the cost of doing business in Hawaii at record highs, we know how important it is to keep labor costs in line with revenue. Our plans are priced competitively and include value-added services like time-in/time-out systems. Our three tiers of PEO service plans are tailored to the size of your business and specific needs. We offer a 100% paperless solution which means that your employees can manage their needs through a computer, tablet or phone. We can truly improve your employees work benefits while freeing you up to run your business.
What are you waiting for? Companies that partner with a PEO benefit from 7-9% faster growth, 10-14% lower employee turnover; and they are 50% less likely to go out of business. Contact us today to get started!