If you think your business might need an HR department but are unsure how you should introduce one, read on.
Is it Illegal to Not Have an HR Department?
In short, no. It’s not compulsory. However, we recommend you do. You can employ an in-house HR manager or outsource to experienced HR professionals.
How to Protect Yourself if you Don’t Want an HR Department
Suppose you choose not to hire an HR manager. In that case, there are other steps you can take to protect your business from escalating employee issues, primarily by outsourcing HR advice to an external HR professional when guidance is needed.
At What Point Does a Company Need an HR Department?
This fluctuates, and there is no hard and fast rule defining when you should create an in-house HR department. If you have only a small number of staff, you can likely manage by seeking advice on your business’s HR processes and draft documentation on an ad hoc basis. Or, if you have the budget to hire a part- or full-time HR specialist, and you are confident your business can support one, then go ahead and start recruiting.
If you feel you need more regular day-to-day support with a range of HR issues, consider outsourcing your HR department. This could be appropriate if:
- Your business is expanding rapidly
- You wish to tightly review performance
- Your knowledge of current employment law and how to keep up with necessary related HR changes required in your business is limited
- You have increasing employee disputes
- HR issues are overtaking your ability to effectively run your business.
Pros and Cons of Having an HR Department
We’ve listed some general advantages and disadvantages of having an in-house HR department:
- Ability to deal with urgent HR matters as they arise, as you can prioritise your business and don’t have to wait for the availability of an outsourced professional.
- Retain control in-house
- Able to regularly check-in on progress with employee concerns
- Employees possibly feel more at ease speaking with someone they know rather than an external HR adviser.
- It’s expensive to pay the salary and other employment benefits of an individual who might not be fully engaged if you have limited HR matters to process
- The HR specialist may not have extensive experience and might require external legal or specialised HR guidance, resulting in the business paying twice to resolve the one HR issue.
- If your in-house HR professional makes a mistake, your business pays
- Your in-house representative may be a generalist rather than a specialist in legislative compliance, pensions or payroll.
If you wish to streamline your business’s costs, you might benefit from the efficiency of outsourcing HR functions.
How to Create an HR Department
So, you’ve decided to go ahead and create an HR department. But where do you start? Here are some suggestions to consider:
- Company culture: what is the goal for your company’s culture?
- Job descriptions: do you have position descriptions and expected outcomes for every role?
- Company structure: have you articulated your organisational chart?
- Documentation: do you have clear, precise, well-drafted employment contracts and policy documents?
Once your HR department is up and running, we recommend you audit or review your business’s HR policies, procedures, and documents annually, at the very least. It can be helpful to consider the following during your HR audit:
- Is your business legally compliant? Do your company policy and procedure documents reflect current employment law? If not, how will you seek to rectify this? How quickly can it be done, and at what cost?
- Is your business following best practices?
- Is the business’s intended strategy being implemented? And, do your processes and procedures align with this strategy? How do you plan to help your staff work towards implementing the planned strategy? If not, how can this be changed?
- How is HR performing across the different areas of your business? If there are areas where your HR’s performance is lacking, how can this be addressed? It might be worth reviewing critical HR functions such as: recruitment, training, employee relations, and performance management.
If all of this sounds overwhelming, it’s okay. We can help.
Why Choose ProcessWorx?
At ProcessWorx, we’re driven by our purpose of helping small businesses thrive. We understand how dedicated small business owners are when it comes to building long-term success.
We aim to provide quality HR services in Perth grounded in value, integrity, passion, and care.
We specialise in offering affordable, knowledgeable, and comprehensive advice, coupled with leading technology and system solutions – all tailored to small businesses’ needs.
One of our greatest strengths is our personalised service. As every small business is unique, we avoid cookie-cutter solutions. Instead, we offer a suite of customisable options – matching them to suit our clients’ exact needs.
Human Resources for Small Businesses
As a small business, your employees are your best asset but also your most significant liability. You’ll need a Human Resources specialist to assist with recruitment, employment contracts, agreements, employee engagement, performance and discipline management, and representing you at Fair Work.
View full details of HR consultancy services for small businesses.
Human Resources for Farmers
When it comes to the success of a farm, your most significant resource is your employees. Both an asset and a liability, managing the HR of your farm is an important responsibility. Here at ProcessWorx, our experienced HR professionals offer a wide range of HR services while fully understanding the unique challenges farmers face.
See all Farm HR Solutions packages.
For advice and guidance regarding HR for your company, contact ProcessWorx on (08) 9316 9896 or firstname.lastname@example.org.