Growing companies face the question of when does it become a necessity to have an executive within the company that is dedicated to human resources. While it varies for each company, in this Friday’s Five, I’ve set forth five considerations that can help growing companies assess their need for a dedicated HR professional.
1. A director of human resources is not legally required.
There is no legal requirement for a company to employ anyone with an human resources background or any certificates involving human resources. Likewise, there is no legal requirement that whoever takes on the human resources responsibilities in a company have any specific human resource training or certifications. Now, if the individual is involved in conducting workplace investigations, such as investigating complaints of sexual harassment, that individual’s experience in conducting investigations and how the investigation was conducted would be closely examined and potentially challenged by a plaintiff’s lawyer in any litigation. Therefore, it is recommended that any HR professional that is conducting workplace investigations have experience and training to ensure the investigation can withstand scrutiny from a plaintiff’s attorney during litigation.
2. Number of employees in the company is a primary consideration.
Obviously, with more employees, there are more administrative issues, complaints to handle, and more responsibilities with hiring and on-boarding employees.
Now there is no hard and fast rule that once a company has so many employees the company should have in-house human resources. There are many considerations and differences for each company that make this a highly individualized determination. However, once a company approaches 50 employees, the employment issues become complex enough to begin to consider a dedicated in-house director of HR.
3. The complexity of workforce is another consideration.
If the company is involved in manufacturing, there will likely be more of a need for in-house human resources to deal with injuries and workers compensation issues. Likewise, highly labor-intensive industries will have more of a need for human resources to deal with scheduling, turnover, and the continual hiring needs.
4. A company should be able to timely respond to any complaints and take effective remedial actions.
If the executive who take on human resources duties find themselves unable to timely review and respond to complaints, it is likely time that the company needs to hire a human resources professional. First, it is a requirement under California law that companies timely and effectively investigate complaints. Second, timely and effectively investigating and responding to complaints will substantially lower litigation risk and potential liability risks. If a company is unable to manage this duty among its current executives, it is imperative that a human resources professional with this experience is hired to meet these obligations.
5. Human resources can play a critical part in managing litigation.
If a company as significant employment lawsuits, a director of human resources can be a critical aspect in the support of outside counsel defending litigation. An experienced human resources professional can prepare reports, summaries, and even analyze payroll or time records relevant to ligation, which can help save significant amounts of money. In addition, the director of human resources can convey personnel issues and other critical information to outside attorneys defending the company. A human resources professional that understands the employees in a company can be a very valuable aspect in preventing and defending litigation.