Advantages & Disadvantages of the HR Department

As the owner of a small business, the time might come when you face the decision of whether to add a dedicated human resources department, either on an in-house or outsourced basis. According to management consultant Ethan A. Winning, as a general rule, when a company reaches 50 employees, the HR role needs to be handled by more than one individual. Adding an HR department offers advantages as well as possible disadvantages.

Relieving Burden

As your small business grows and you continue to add employees and possibly even additional locations, it becomes increasingly difficult to micromanage each aspect of your business. By adding a human resources department, you won’t need to be as directly involved in time-consuming tasks such as recruiting, benefits administration and developing and implementing personnel policies and procedures. Instead, you can focus more on big-picture items such as increasing revenues and gaining market share.

Maintaining Compliance

Businesses must ensure they are in compliance with the large number of rules and regulations that govern personnel relations and management. Human resources professionals possess the expertise in areas such as discriminatory practices and compensation laws. This prevents you from breaking regulations that you might not have even known existed. In the process, you can avoid costly fines and possibly even lawsuits while preserving the good reputation of your business.

Relinquishing Control

A disadvantage of adding a human resources department is that it requires you to relinquish control regarding how your business operates. Other individuals now have the responsibility for making important decisions in key areas, including hiring and personnel relations. If you bring outsiders into your organization or even outsource human resources functions, you face the risk that these individuals will not fully adapt to the nuances of your business and end up making decisions that are not in your organization’s best interests.

Time and Money

It takes time to successfully implement a human resources department. It will likely take a while to hire the staff or to locate the right firm if you prefer to outsource the function. There is also likely to be a learning curve while the new department gets up to speed, as well as a lengthy adjustment period for you and your employees. Depending on how large an HR department you add, it could represent a significant cost to your business.

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