I’m Ed Boylan, and I’d like to talk with you about your options for managing human resources.
DIY Human Resources vs. Hiring an Attorney vs. HR Contractors: Which is Right for You?
The first option is “DIY”, or do-it-yourself. The second is to hire an attorney – an employment law attorney. Your third option is to hire or directly contract with a human resources professional.
Option 1: Manage Your Own Human Resources
In the DIY option, you’ll have to do your homework on the Internet. What’s particularly helpful are state and federal .gov websites for the Department of Labors. They can give you excellent insight what compliance you must have. And whatever the level of compliance is, even with a few employees, you must still not discriminate or treat employees differently on the basis of age, race, sex, sexual orientation, veteran’s preferences, disability and a whole lot of other things.
My point is that being small in size does not significantly alter your requirements for compliance, or the risks associated with being noncompliant risks associated with bad or discriminatory employment related decisions. The old adage, “ignorance of the law is no excuse” was never truer in regards to human resources compliance. While this may be your only option, flying solo in this area is not my recommended approach.
Option 2: Hire An Attorney Specializing in Employment Law
Your second option is to hire an attorney. Having a good employment law attorney is like a good CPA: they can answer your questions sure you’re compliant. However, with this option, the bottom line is the bottom line. It will be a significant expense associated with using an attorney.
Option 3: Hire or Contract a Human Resources Specialist
The third option is to hire or directly contract with a human resources professional. This is my recommended option for three reasons: first, an HR professional will have all the answers you need about just about anything that you want to do regarding an employee benefits or an employment related decision.
Secondly, you have great flexibility in how you set up the arrangement. You might want to hire somebody full-time, part-time or on an as-needed basis. If your circumstances allowed for it, you can also go to a specialized staffing firm and hire an HR professional from them. Now, there will be an additional charge to the staffing firm in addition to the records page that HR professional, but again, they are an employee of the staffing firm and if you need a lot of time they are with you full-time but when your need diminishes and work goes away, that’s the end of the assignment.
The third reason is that you can contract directly with an HR professional on an as-needed basis; typically with somebody who may have direct experience in your field such as manufacturing, pharma, software, and they can bring that knowledge and their prior experience to bear on solving your problems, getting your policies and procedures written, and getting you up to speed much more quickly. Very often they have access to specialized software and templates that can help you with things like job descriptions policies and procedures. Directly contracting with an HR professional also means that you can flex the hours as needed; you’re only paying for the hours that they work you can end the assignment when needed. Directly contracting with good HR professional will be significantly less expensive the contracting with an attorney.
Be Careful With Employee/Contractor Classification
There is a caution here: the laws regarding how you classify somebody. Using them as an independent contractor versus hiring them as an employee can be complex, and I would consult with the HR person that you’re thinking of hiring as to whether the amount of time and the extent of time that they’re going to be use would have been best classified and hired as an employee, or whether it’s permissible to use them as an independent contractor.
Including HR In Your Business Plan for the Future
In summary, you want to define what your HR needs are going to be, especially in the short term: say the first 6 to 12 months especially if you’re a startup. Then you want to do your homework, on the Internet or through trade associations, as to how other similar companies, startups, or existing firms handle the HR function and use that information to decide what option that you want to apply. Hire an HR professional, contract with an attorney, or do a direct contract with a human resources professional.
About Ed Boylan
Human Resources is one of those functions that many businesses – especially startups and small firms – wrestle with. HR has the capacity to make tremendous contributions or be a source of significant liability.
With 42 years of “experience, insights, and scar tissue,” Ed Boylan has seen the evolution of the Human Resources function and managed it in companies from a few hundred to 55,000 employees, from one state to 50 state operations. As a senior manager, he’s wrestled with business problems in the retail, distribution, hospitality, services sectors and continues today as Principal in his own consulting firm. He believes that understanding the fundamentals of what HR is can avoid potentially costly problems and provide a foundation for integrating it into a business plan.