Published January 2005

Issues to consider before
adding HR director to staff

Q. As the owner and manager of a small manufacturing plant (120 to 135 employees depending on the season), we are facing a decision to add a human resource director to our small executive staff. Currently, we have a personnel specialist who maintains the payroll, employment records, government compliance and other, chiefly paperwork, issues. I handle the more strategic personnel matters — hiring, training, employee motivation and communication and safety. As we grow (about 10 percent annually), the strategic side of personnel has becoming increasingly demanding. What factors should we consider in making this decision?

A. Not long ago, companies of your size and even larger easily “made do” with a personnel clerk. Today, with an emphasis on retaining employees and cutting turnover rates, the “people” side of business demands more time, creativity and initiative far beyond doing the paperwork.

A trained HR executive today is asked to maintain acceptable employment levels, develop meaningful benefit plans, plan and provide essential training and develop safety programs while simultaneously boosting productivity as well as employee satisfaction without appreciably increasing the expense side of the bottom line.

Although your business is based in manufacturing, all businesses are affected by the pressures of the emerging information age.

“With the emphasis on human assets so important in the emerging information age, the human resource profession has achieved a status of strategic importance for businesses and organizations and importance to the lives of the American worker,” Michael Losey, former CEO of the Society of Human Resource Management, said as his organization entered the new century.

In larger organizations, HR directors can literally affect the lives of employees depending on their decisions.

Given their rising level of responsibilities, HR professionals are finding their pay growing faster than average executive salaries. Average salaries for an HR generalist that would be appropriate for your size company may reach $60,000 annually. HR budgets are rising as well, estimated at approximately $800 per employee.

To determine whether your organization needs an HR director, determine how much of your time and that of any other executives or supervisors is spent on strategic personnel matters. Then determine whether spending $95,000-plus to establish a full-time HR department would be worth the extra time available to you to spend on other important management issues.

Ask yourself whether you are prepared to “let go” of most of the personnel matters that are increasingly taking your time.

You may want to ease into a new HR program. An independent HR consultant could be hired to provide a specified amount of HR work for your company on a contract basis. Many small businesses have found this to be a reasonable short-term solution.

Some of the more clerical personnel functions, such as payroll, employment records filing and storage and government compliance issues, also can be “outsourced” to a specialized company that fulfills these services for several companies.

Also consider the impact of such a decision on your employees. Some may feel they are “losing touch” with the owner if you have an HR specialist take over. They may understandably feel the small, intimate family-like feeling of the company may be lost.

Above all, remember that your decision may well affect the long-term future of your company, because in business today, employees and their outlook often make the difference on achieving the success you desire.

Eric Zoeckler operates The Scribe, a business writing service with many Snohomish County-based clients. He also writes a workplace column appearing Mondays in The Herald. He can be reached at 206-284-9566 or by e-mail to mrscribe@aol.com.

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