At what point running a small business does it make sense to actually hire someone specifically tasked to Human Resources?

In my experience, you generally would be better off having a business relationship with an external provider.  The needs of a small business for strong HR support can best be met through this type of outsourced arrangement.  I generally recommend companies think about internal full-time professional HR support at around 250 employees.  General administrative support internal to the company can manage most of the "administrivia" while professional external support will address the rest.  The talent level required is rarely affordable to a small business.

Many others have offered a similar perspective.  Until you reach a critical mass that is appropriate for your business in your environment it would be most effective to contract for "just in time" HR services from an experienced provider.  I, among others, offer that service.  If you like, give me  a call and I'll offer some insights on matters to consider and how to select a provider that will best meet your needs.

With the litigious environment we live in today it is always important to hire an HR expert. It’s about risk Managment just as much as it is about process, policy and employee relations. In IL there are employment regulations for employers with one or more employee. Smaller employers may need an HR expert to get set up and ensure compliance but then not again for six months, a year or more. It just depends on the number of employees. Once an employer gets to 40-45 people they should at least habe a part-time dedicated HR professional on staff. Definitely 1 full-time HR expert to every 100 employees at a minimum.   If you to hire make sure they have been certified in HR just like you would want an accountant to have a CPA. 

You will want someone who has their finger on the HR needs starting day one; someone who understands the paperwork needed/insurances needed or at least someone who understands when they don't know what to do and can call in reinforcements!  That person can outsource the need or handle it themselves if they have experience/knowledge with the specific need or task.   

As stated by others in this group, there are some great outsourcing solutions.  Many HR Consulting firms have a dedicated HR package on a monthly retainer; others bill on a project rate or will bill hourly for the work done for you, then be available on a reactive basis (you call them when needed).  When you are a start up or a small company, spending even $5000 a year with an outsourced consultant is better than $90,000 for 1 staff member, and even better than paying out thousands in fines because "you didn't know" or $5,000,000 for a lawsuit that could have been easily prevented by someone who knows how to protect the company... by protecting the staff!  

*Pointers on choosing a firm!  (1) Choose a consultant in YOUR STATE so they are in touch with your needs.  Choose a consultant who has experience with start  ups and small business - not just large organizational strategists.  Someone who can roll up their sleeves and DO the work rather than those who only tell you what you need to do.  (2) Make sure they have a decent sized active client roster; someone who works with just 2 other clients may not be the right choice.  Make sure they aren't just "unemployed" at the time, and will stick around when you need them later on.  (3) Ideally a consulting firm with a team will be a better choice so you don't have to wait too long for help if they are on a project or with a client and can't take your call or respond timely when you reach out.  (I've been the solo person when I first started my firm, and it's rough when being pulled in 5 directions at once... then the following week have nothing to do!)  And (4) ensure they are properly insured, have a contract, have a website.  They don't necessarily have to have a brick and mortar office, because that's high overhead and higher prices, but they should be established.   You tell the Firm what you want from your relationship, and try not to be forced into a box or given only 1-2 solutions that don't work for you.  You should be able to create the relationship you want with them that fits the reasonable budget you have.

Typically an organization will have a dedicated on-staff HR employee (part or full time) when the organization first reaches between 50-100 staff members.  Consider a ratio of 1:75 when adding to HR staff.  Payroll should be done or closely supervised/approved by HR.  For checks and balances, a finance person should oversee payroll when done solely by the HR function.  Many larger companies have HR generalists on staff, and will still outsource projects to specialists and strategists.  A good HR firm will grow with you and adjust their relationship with you as you bring in-house staff to do more.

Good luck!

As others have mentioned, if you are finding HR type tasks being pushed aside then it is beyond time.  That said, many business owners don't even realize they've been pushing aside HR since the day they hired their first employee.  Your question was posed as a small business question, based on that I would highly recommend partnering with an HR professional who can assess your needs and work together with you to develop a plan to support your HR needs.  If you are large enough, you could hire someone, but there are many other options out there that would likely be more cost effective for your small business.

HR should be a part of starting and running your small business. HR should never be an option especially if you have employees. If it's not affordable to bring on a full-time/part-time HR professional then look at partnering with an HR Consulting Firm many of us are far more affordable than having a full-time  HR on-site. 

Great question, many companies partner with a PEO (Prof Employer Org) just for those kinds of need. Support is there weather you have 2 employees or 200.  Along with access to Benefits and more to keep and attract key employees in this tight labor market. We’re scalable for all types of business and needs, give us a quick call to discuss how you can grow your business faster with less headaches.

I would start with asking you what is included under your umbrella of HR - is it benefits, risk (workers comp/unemployment/employee relations), hiring, retention, payroll, absence management, etc. The list is long and can be challenging. I think you should identify what you are seeking help or knowledge on and make the decision from there.  I have had clients that hired a PT HR clerk but they didn’t know what things they didn’t know - didn’t know what they needed and didn’t really fill the staffing/knowledge gap. I have also had others that found seasoned staff to help with “setting up” the functions based upon their past experience in the field. My point - determine what your needs are and decide whether you are better served with contracting for help or hiring. Remember that there is a potential longer term cost with a hire versus a contract so if unsure - start small. You can always work into an employment role.  

I recommend you do this as early as possible. However, as a fellow small business owner I understand how tight finances can be in the beginning. While having someone full-time may not be feasible, you could certainly have someone part time or as needed. The issue you are running into is actually the reason I started my company. Basically, I recommend you outsource until you grow to the point where you need someone full-time in HR. That is my goal for every client I work with. At the end of the day it’s up to you, but going without someone at all turns you into a ticking time bomb for compliance issues. I had a similar situation happened with a client before they hired me. They did not realize that a certain type of person they were contracting for had to be an employee to be covered by Workmen’s Comp. they ended up paying a very hefty fine. At the very least you should have someone that you can turn to for questions and who can give you pointers to avoid legal pitfalls. Feel free to reach out if you have any other questions!

Tabitha

If the HR functions are being pushed aside so that other business functions can be handled, that would be a good indicator to either outsourcing some of those duties or, if you have the budget for it, bringing in HR personnel.