The Downside Of In-House Human Resources For Small Businesses

the downside of in-house human resources for small businesses

Traditional business models include in-house human resources (HR) positions to manage the employee lifecycle. However, small businesses rarely need the majority of the services a full-scale HR department provides to corporate-style businesses. 

As a result, many business owners are migrating away from in-house human resources and using virtual services on an as-needed basis.

5 Disadvantages Of Investing In In-House Human Resources Personnel

The reality is that small businesses rarely receive an ROI on in-house HR staff. They are better served saving in-house positions for the roles that are so necessary to your brand and its daily operations that you can’t live without them. 

Here are five of the most notable disadvantages of spending your precious business start-up or investment costs on in-house HR.

In-House employees are expensive

According to the SBA, the average small business owner spends upwards of 1.4 times more on an employee than the employee earns. This figure is even higher in California, where costs of living are exponentially higher than elsewhere, and legislation demands employee-provided benefits and a high “minimum” wage.

Are humans worth your investment? Of course, they are, but why spend 1.4 times more than their wages for services you can get more affordably somewhere else? Instead of focusing on an HR-focused employee, take advantage of virtual HR services that handle your needs and only hire in-house employees that are absolutely essential.

Most small companies don’t need full-time HR services

Undoubtedly, companies with 100 or more employees may benefit from full-time HR personnel in most cases. It’s also true that companies with 50 or fewer employees rarely have enough work for a full-time HR professional. Yet, most professionals with HR experience are looking for more than just a part-time or “once in a while” job. 

Start adding up how much time your small company spends each week on HR duties. Odds are the demands are mostly part-time and rarely to never full-time. This means you can get the same work done for significantly less money using virtual services.

It’s hard to find the right fit

Because you don’t need a full-time HR person, odds are you have someone doing double or triple duty. In addition to doing what you need them to in terms of brand product or service offerings, they’ve got a foot in the HR door when needed.

There may be lots to do when recruiting and hiring, onboarding new employees, or processing workman’s comp or other benefits claims, and then long periods of HR radio silence. In the meantime, your employee is overworked in the busy times and are only able to catch up or feel their best when the HR demands quiet down.

As a result, it’s not easy to find a person who is willing to serve multiple roles at the same time. Outside of business owners and entrepreneurs, most people want jobs that align with their education, training, or talents. If they’re stretched too thin by taking on additional roles, they burn out.

The work is sporadic (and erratic)

Along those same lines, HR work can be sporadic. You may go a few weeks where someone works overtime to meet the company’s HR needs, alongside periods where only an hour to a few hours are billed to the HR account. 

HR work can be unpredictable, making it harder to guarantee full-time work with the option of cutting back when HR services aren’t needed. With an in-house HR employee, you pay them regardless of the workload or risk losing them to a company that can. On the flip side of that, with a virtual employee, you have professional, experienced HR support on demand - as much or as little as you need - and never a dollar wasted

Bonus Reminder: In-house human resources staff become biased

The very nature of HR’s responsibilities demands an entirely neutral and objective approach. Any chance that HR was biased in any way can result in excruciatingly demanding and financially draining litigation. However, in-house HR teams can’t help but develop a bias when they work day in and day out with the company’s employees - and with all of the insider information they glean as part of their job.

Outsourcing in-house human resources means you benefit from 100% unbiased objectivity. Our virtual HR pros can’t help but be objective because they aren’t there in person or forming personal relationships with employees or management. This keeps things far more professional, especially in sticky situations or when an employee needs to be let go. Our virtual services personnel are professional friendly, but keep things businesslike at all times.

Find The Right HR Fit For Your Small Business

The ZenRes team understands the daily challenges of running a small business. That’s why we’ve specialized in curating a team of incredible virtual professionals, including HR personnel. Our human resources outsourcing program ensures your company operates at maximum efficiency with access to top-notch HR support whenever - and wherever - you need it most. 

Contact us to learn more about outsourcing your company’s in-house human resources needs so the bulk of your company’s investment is available to grow, develop, and expand your business.

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