I’ve worked with entrepreneurs and startups for nearly a decade, and one of the most common questions I get asked is “When do I need HR?” If you ask Google that question, you’ll get a variety of answers. In preparation for writing this article, I also asked Google, and I was both shocked and concerned that the little “snippet” that shows up at the top of Google search answered, “when you have 100 employees.” Let me assure you that while the answer is different for every business, you should bring on HR long before you hit 100 employees.
So when exactly should you hire an HR professional for your startup? The answer is “It depends.” But here’s a breakdown of my thought process around bringing on HR at different milestones.
First of all, the most important thing you can do when running your own business is to “know what you don’t know” and stick to the aspects of running a business that you do know. You can outsource or hire someone else to do the rest, including HR.
The moment you need someone with HR knowledge is when you hire your first employee. When you hire your first employee, you need someone who knows how to complete an I-9, knows federal and local laws around paying that employee, tracking time, and classifying employees. If these are things you know, great, tackle them yourself. But if not, is it worth learning? Is your time better spent learning HR or focusing on the revenue-generating aspects of your business and letting a professional assist with these tasks? If you don’t have any HR knowledge (and that first hire isn’t someone who knows HR), then this is probably a good time to start talking with an outsourced HR professional who can assist you on an as-needed basis.
If you’ve got some basic HR knowledge and feel comfortable hiring and paying your first couple of employees, then consider bringing on an HR professional for your startup when you hit these milestones:
- When you hire your first out-of-state employees – knowing the laws of one state that you’re familiar with might be doable, but learning a new state? Probably a good time to consult with an HR professional.
- When you hit “magic” numbers that trigger other rules and regulations – 5, 15, 25, and 50 are some of them.
- When you want to add benefits – having a professional who can walk you through the various options for offering benefits will set you up with the best offering for your budget that both attracts and retains talent.
- When you start hiring managers – if you have a large enough team that you need managers to manage those employees, you probably also need HR.
- When you need an employee handbook – anyone can pull templates off the internet for basic policies, but if you’re ready to create a handbook that helps craft the culture of your company, you’ll need an HR professional.
If you’re still wondering when the right time for you to bring on HR is, start by talking to an HR professional. You don’t know what you don’t know, so ask for help and let an HR expert help you determine what your business needs are.