By Brian Kreissl
One of my most popular blog posts was the one I wrote about the challenges involved in having non-HR professionals do HR-related work. It likely resonated with people because they realized that whether or not an organization is large enough to have a dedicated HR function, someone still has to do the work that normally falls under the HR umbrella.
In a small organization, HR tasks are generally completed by financial controllers, office managers, owner/managers or executive assistants. But when is it time to consider establishing a formal HR function and hiring the organization's first true HR professional?
Ratio of HR practitioners to employees
In the past, the often-quoted ratio was roughly one HR practitioner for every 100 employees. Obviously, that means it doesn’t make sense to set up a formal HR function or hire the organization’s first HR practitioner on a dedicated basis until the company approaches 100 employees or more.
That sounds about right to me. When I think of smaller organizations, those with fewer than 100 employees generally don’t have an HR person. For example, one company I worked for had about 30 or 40 employees, and the controller was primarily responsible for HR (although hiring managers generally handled their own recruiting).
While that rule of thumb likely still makes sense in many organizations, the exact ratio will vary depending on a number of factors such as the size, sophistication and resources of the organization and its HR programs, the industry in question and to what extent HR practices and programs are outsourced and/or delegated to line managers.
Assuming fairly slow growth for the foreseeable future, it may make sense to hire one HR generalist (or “HR soloist”) to start things off. As I recently read somewhere, companies generally don’t start off hiring specialists, so any generalist working in such an environment would need to be a “Jack of all trades” to a certain extent.
It is possible that such an individual would need to get involved in certain tasks on the periphery of HR such as payroll, corporate communications or office and facilities management. Nevertheless, hiring a competent and ambitious person who is able to head up the organization’s HR function as it grows is likely to be a great career opportunity for someone who likes the idea of running their own show and growing their career along the way.
Such a person would need to have a very broad HR generalist background and a strong academic grounding in human resources management. It would also be important to have a solid understanding of the business.
While an external candidate would likely be hired for such a role in most cases, there may be a rationale for appointing the person who was handling the organization’s HR activities all along. Provided such an appointment wouldn’t seen as a step backwards and the person is competent in handling HR tasks and is interested in the HR profession, that might be the best option in many cases.
For example, I could see the rationale for appointing a highly competent and business savvy executive assistant into such a role. Nevertheless, I would argue that such an individual should probably begin to pursue formal HR education and/or certification – particularly if that person’s responsibilities are predicted to grow and expand in the future.
To whom should an HR department of one report? In many cases, such a person would report to someone in finance or administration.
However, even if the organization is still relatively small, if it is serious about its growth plans and it has a strategic orientation towards its HR function, it might make sense to have that person report directly to the CEO. That’s not to say such a person should have an inflated title such as vice president of human resources or chief people officer (although that could eventually become the reality if the organization continues growing and the individual is able to grow along with it).
But if the organization is growing rapidly – particularly if its growth is about to take a quantum leap (e.g., through a merger, acquisition or opening a large new facility) – an entire new HR department consisting of several people may need to be set up. In such a case, it may even make sense to appoint a VP or director of HR to lead such a transformation.
Brian Kreissl is the managing editor of Consult Carswell. He can be reached at email@example.com. For more information on Carswell's HR products visit www.carswell.com.