Balancing Act: Lacking HR skills weighs on employees and small-business owners

Lance Coffman: Efactory offers training for owners and managers who handle HR in-house.

Elizabeth Hurst: Companies begin reaching out for HR services when they reach between 10-25 employees.

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Small-business owners juggle a lot of responsibilities, and a study by national payroll and human resources firm ADP found over half of them choose to handle HR matters in-house – with 80% of professionals tasked with the work having no experience or training.

This can cause legal and culture issues, as half of employees working in small businesses believe the lack of an HR department leads to a toxic workplace, a survey by data services firm Secure Data found.

Lance Coffman, a consultant for the Small Business Development Center housed at the Missouri State University business incubator Efactory, encounters small-business owners and their employees that are searching for HR training.

The U.S. Small Business Administration considers any company with 500 or fewer employees to be a small business, and the U.S. Chamber of Commerce recommends adding an HR person to the staff when there are at least 10 employees within the company. Other experts offer numbers of 25 to 50.

Coffman said having HR training is critical, even if it is just to learn soft skills because those skills allow for better communication and understanding in the workplace. He went on to say that a lack of HR skills can lead to bigger problems.

“There are a lot of legal regulations and just a lot of risk for a business if they do not handle HR properly,” said Coffman. “It could open them up to lawsuits and employee turnover, which it is very expensive to onboard and get new employees.”

Coffman notes the Efactory is a resource for businesses to use if they are seeking HR training. These training courses range roughly $300-$500 and offer insight on topics like conducting effective internal investigations and optimizing workplace safety through a threat assessment process. 

“I think some of the best impact we have seen is in the people who use us for custom training year after year and organizations that send their people and their newer managers every semester,” said Coffman. “I think just by consistency and sometimes from years of sending people to us speaks to how impactful it is for business.”

For owners who prefer not to handle HR matters themselves, they have the option to outsource their HR departments by hiring professional employment organizations and administrative services organizations. Outsourcing HR functions can save owners up to 27% in HR-related costs, according to the Society for Human Resources Management.

HR Advantage Inc. is a human resource consulting firm based in Springfield that offers the functions an in-house HR department might need.

“We excel in the space of small business as oftentimes smaller businesses are not in the space of having a full-time or regular part-time HR professional on their payroll,” said Business Development Director Elizabeth Hurst. “We are an ideal solution for smaller businesses as we provide the value of having regular service and support during critical times and can buffer complicated matters associated with having employees.”

A dedicated HR contact, whether inside or outside of the organization, is important to employees. The Secure Data survey found 64% of employees say their boss has a hand in HR operations and 24% feel uncomfortable about it. 

Hurst said her company helps take over all the major responsibilities of hiring and handling in-house matters to reduce the stress an owner or employee might feel if handling everything themselves. They also offer a recruitment division that helps employers find and hire a full-time HR person.

The national average cost of outsourcing is anywhere between $45-$1,500 a month depending on the amount of services provided, according to Complete Payroll Solutions. Hurst believes as a company grows, the owner needs to hire an HR handler that can take on those responsibilities with a professional background.

“We do see employers reaching out around that 10- to 25-employee mark where they’ve grown into a need for processes and guidance,” said Hurst.

While outsourcing HR functions through a professional employer organization is an option for small-business owners, Wesley Scroggins, a professor of management and human resources at Missouri State University, believes small businesses should always have an HR generalist that understands a business or has managerial skills. He notes that it is important to align HR function with the overall organizational function.

“I’ve never been a big fan of outsourcing your HR functions because often when you outsource your HR functions to a third party, you lose some degree of control over those functions,” said Scroggins. “You want to use HR strategically, and it needs to be a really good fit with your organization.”

Lindsay Bauer, director of people and culture at Keep Supply, an industrial equipment supplier, believes that outsourcing HR is fine until a small business reaches the 50-person mark because as a company grows, it is important to hire someone who understands and protects the company culture. 

“You want to have someone who values your business values and goals,” said Bauer. “It is pivotal for us to have an internal team because we are driving the scale of culture that we have at Keep Supply.”

Bauer started her career with Keep Supply as an HR consultant but was hired full time in 2022 when the company reached 41 employees. The company has since grown to 83 employees.

Scroggins notes that good relationship management and building relationships at work are critical competencies.

“The HR person really needs to know how a business functions, what makes that business successful, and how it operates,” said Scroggins. “They need to be familiar with that and good HR people are.”