Ad-Hoc HR Causing Headaches for Small Business Owners

According to a recent study by ADP, a global provider of cloud-based Human Capital Management (HCM) solutions, small business owners are wearing more hats than ever before – including the role of HR manager.  As much as 70 percent of small businesses in the US — approximately 1.5 million businesses — handle the human resources (HR) function with staff members who manage the role on an “ad-hoc” basis – as an additional task to their primary job.  While there may be many reasons why business owners have chosen to delegate HR responsibilities to someone other than an experienced HR professional, there are a number of business risks with this “ad hoc” approach and for businesses concerned about the financial implications of adding additional staff, there are working capital loans available.

These ad-hoc HR managers spend over 13 hours weekly on average on human resources tasks, taking significant time away from their other job responsibilities.  The ad-hoc HR managers include small business owners, business leaders, office managers, accountants and finance staff.  The survey results were based on a sample of U.S. businesses with between five and 49 employees. More than 1,000 business representatives completed the online survey.  Of those respondents, 75 percent described their firms as either “established” or “mature,” in other words, they were not “start-ups” for which a more informal HR structure may be expected.

There is certain obvious risk inherent in having non-trained staff managing the human resources role; that their lack of training could put their companies at risk. The top areas of concern are talent management, compliance, HR policy enforcement, and employee safety. Only 1 out of 5 ad-hoc HR managers expressed confidence in his or her ability to manage HR tasks without making a mistake. Four out of five individuals surveyed are concerned about their ability to keep up with future changes in HR regulations.  As with other key business functions, experience matters.  The HR role is not only integral to talent management and succession planning, but also ongoing training and professional development, regulatory compliance, pay competitiveness (and determining appropriate pay), company ethics and employee relations.

Other findings from the study revealed that:

• Approximately 75 percent of ad-hoc HR managers are concerned about accurately and consistently adhering to HR compliance regulations.
• 82 percent of ad-hoc HR managers have no formal HR education or certification.
• Half of aHRMs are uncertain whether the employees of the business know where to turn with HR questions, and two-thirds have some concerns about employees getting the correct benefits information necessary to protect them and/or their loved ones.
• Half of aHRMs handle the HR tasks manually using paper or spreadsheets, and less than 1 in 4 agree they have the tools to do the job properly.