How to Develop an Effective and Scalable HR Infrastructure
From: "Help! My Business is Growing" Podcast
To successfully grow your business, you need to keep an eye out on the finances and ensure smooth operations, production, and logistics. Of course, you also need a marketing and sales strategy in place.
But what about your Human Resources? Is it something you're actively working on? If it's not your focus, you're not alone.
Sadly, despite it being an essential and crucial foundational piece of any business, it often gets lost in the daily grind, dropping out of the priority radar.
Maybe because your company is still small, you feel that you can handle its management. But even at the start-up and small business stage, overlooking your HR is extremely risky both operationally and financially. What happens when your business and your team expand beyond 50+ employees?
In this episode of Help! My Business Is Growing, our guest Milly Christmann breaks down the importance of planning and implementing an HR Infrastructure no matter the size of your business.
We discuss how a comprehensive HR infrastructure is crucial and can impact your company. Not only can it help you attract and retain top talent, but you'll effectively support your company's operational and financial plans - and align resources to help hit business objectives.
Milly Christmann is a Fractional HR Leader and owner of Marathon Growth Management, a Human Resources consulting business that helps small to medium-sized businesses attract, develop, and retain top talent and achieve their goals by unleashing the power of an engaged workforce.
In this week's episode, we discuss:
03:48 What are the signs that it's time to plan and implement an HR infrastructure in your business?
06:29 How does a "people plan" look like and why it’s needed?
14:50 Should you start thinking about having a dedicated HR professional on your staff when you hit the 50+ employee mark, or is a fractional HR service or an outsourced provider enough to help you manage?
25:21 What about smaller businesses with less than 50 employees? What HR structure should they implement? Do they need it for compliance and beyond? What is that process like in their space?
30:29 What is one tangible step business owners can take this week to get closer to having an efficient and effective HR structure?
Listen to the podcast here:
"You need to have a people plan in order to support whatever financial plan that you've created (for your company)." - Milly Christmann
What are the signs that it's time to plan and implement an HR infrastructure in your business?
Two primary triggers signal that it's time to implement an HR infrastructure - growth and lack of time.
A growing business will need a product or service plan or offerings to its customers, and they will then need a financial plan to handle the funding, bills, and cash flow concerns. But just as vital is a "people plan" that will support and drive all the other plans. Your team, or "human resources", will move your operational output and impact your P&L, which is why salaries are usually the most significant recorded amount. To ensure your finances and operations continue running smoothly, you might need to set up, firm up and maximize your Human Resources infrastructure.
Lack of Time
When CEOs frequently complain about lack of time or feeling overwhelmed, it's a sign that there are inefficiencies somewhere along the way.
More often than not, owners are not spending time in high-value areas but are doing tactical work or spending time cleaning up someone else's mess. If you’re doing that, it might be time to expand your team and bring on specialists to handle the daily grind so that you can focus on high-level CEO work.
"Noncompliance (in Human Resources) is going to drive costs." - Milly Christmann
How does a "people plan" look like and why it’s needed?
There is no one-size-fits-all pattern when coming up with your company's people plan.
One way to approach it is via what will drive revenue by adding revenue-driving positions first and then see if there is any trickle-down effect.
For example, if you bring in more salespeople, will it create ancillary needs or services? What will additional staff trigger in terms of your finances and operations?
In short, coming up with your "people plan" requires a "custom fit" to your company's specific situation that will help you better manage compliance.
Should you start thinking about having a dedicated HR professional on your staff when you hit the 50+ employee mark, or is a fractional HR service or an outsourced provider enough to help you manage?
Both options can work, depending on you and your company's needs.
To help you decide, you can:
Examine your business and think about the complexity of running it - not just the revenue. Sit back and think about what needs to be done and what has to happen so you can get things done. Will you need more blue or white-collar workers? Do we need temps or seasonal workers? And so on.
Ask yourself, "Where is my time going?" and try to track your time for two weeks to determine what percentage of your time is going to truly value-added tasks.
Determine if you need someone in an advisory role that you can ask for guidance. Or if there is enough to do, enough transactions, for you to have someone managing your HR full time.
Understanding the day-to-day needs, transactions, occurrences, and tasks of your business - as well as its anticipated growth rate - will help you make an informed decision.
What about smaller businesses with less than 50 employees? What HR structure should they implement? Do they need it for compliance and beyond? What is that process like in their space?
Determining the HR structure for a business with less than 50 employees will be the same process as it is for a larger company with more employees.
While there are no cookie-cutter ways to do this since this will reflect on different situations (the actual number of positions, the wages, and benefits, etc. won't be identical), the process must always be based on doing things right:
• Treating people well
• Paying them properly
• Developing their talents
• Complying with local, state, and federal labor laws
Compliance is non-negotiable, whatever the size of your business. Even if your company has less than 50 employees, you still need to comply with Department of Labor wage and hour laws. Visiting the DOL and EEOC websites have everything you will need to know regarding compliance, including ensuring that you don't have any discriminatory practices and policies you may not even know about.
What is one tangible step business owners can take this week to get closer to having an efficient and effective HR structure?
If you don't have one, come up with an employee handbook. If you do, revisit it to check if it needs updating.
Your company's employee handbook is your opportunity as an employer to set out the rules of engagement and inform employees that this is how your business operates. It presents the company's expectations from prospective employees and what employees can look forward to while working for you.
Having employees sign and acknowledge the handbook is helpful, especially if, down the line, you coach them or do progressive discipline. It gives you a point of reference when discussing attitude, behavior, and performance
We go in-depth with this topic and more over at the podcast. Listen here:
1. The operational and financial needs of a growing business and the founder's lack of time to work on high-value tasks are the primary triggers for implementing a company's HR Infrastructure.
2. There is no cookie-cutter, standard one-size-fits-all approach when setting up your "people plan." It will depend on the unique situation of your business.
3. Doing a deep-dive analysis of the complexity of running your business and what takes up the bulk of your time will help you determine if you need a dedicated HR professional on your staff. It will also inform you if a fractional HR service suffices once you hit the 50+ employee mark.
4. Whatever the size of your company, make sure you treat people fairly because it also has a direct relationship with being legally compliant.
5. Your employee handbook is a wonderful backbone for setting employee and company expectations, and it is also an effective leadership tool that can support your performance management coaching process. It is ethical, defensible, supports compliance, and is ultimately the right thing to do.
About Milly Christmann
Milly Christmann is a Fractional HR Leader and Owner of Marathon Growth Management. She is a high-energy, operationally oriented talent management leader with extensive human resources, sales management, service, and operations expertise.
Milly is also recognized for collaborating with leaders to achieve their business goals by unleashing the power of an engaged workforce. By using process improvement, technology, strong, impassioned people skills, and attracting, developing, and retaining top talent, Ms. Christmann drives change that matters.
Currently, Milly focuses on her Human Resources consulting business geared to support small to medium-sized businesses. She is leveraging her Fortune 100 background to level the playing field for those business owners. Milly also provides career and executive coaching as well as transitional career coaching.
Other Resources Mentioned On This Episode:
Episode 20 | Navigating Difficult Conversations With Your Employees, with Ron Reich | Help! My Business is Growing Podcast: https://podcasts.apple.com/hu/podcast/navigating-difficult-conversations-with-your-employees/id1579116066?i=1000565115194
Department of Labor
U.S. Equal Employment Opportunity Commission (EOCC)
by Kathy Svetina
Kathy is a Fractional CFO and the founder and director of NewCastle Finance LLC. She is a financial puzzle solver, focusing on women-owned businesses, providing financial insights needed for a healthy and sustainable business.