Small businesses often face the challenge of managing daily operations with fewer employees than their larger counterparts. With limited staff, employees frequently wear multiple hats to keep the business running smoothly. However, not all small businesses have the internal expertise or resources to handle every role effectively. This is where outsourcing, especially Fractional HR, becomes a smart and cost-effective option.

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As fractional services grow in popularity, even small businesses can access experienced, efficient, and budget-friendly HR outsourcing options. According to a recent study by Clutch, 37% of small businesses outsource at least one business process. Moreover, an ADP Management Study revealed that 70% of businesses with fewer than 50 employees assign HR tasks to staff without HR experience, and nearly half handle HR matters internally.

8 Common Outsourced HR Services Available to Small Businesses

Becky Foy, HR Consulting Division Director of Lakeside HR Group, recently compiled a list of common outsourced HR services our small business clients leverage:

1. Employee Handbook Development and Compliance

  • Creating and revising employee handbooks.
  • Ensuring policies comply with state regulations.

2. Employee Relations

  • Managing employee relations issues, including terminations and disciplinary actions.
  • Drafting separation agreements and advising on unemployment hearings.

3. Compensation and Benefits

  • Handling mid-year compensation adjustments.
  • Creating salary bands and resolving compensation compression issues.

4. Job Descriptions and Recruiting

  • Crafting job descriptions and supporting recruitment efforts.
  • Assisting with candidate interviews and managing job postings.

5. Document Translations and Accessibility

  • Recommending translation services for employee documents.
  • Ensuring key documents are accessible for non-English-speaking employees.

6. Leadership Development and Coaching

  • Facilitating leadership training and strategic coaching.
  • Assisting with succession planning and employee engagement strategies.

7. HR Software Implementation and Support

  • Supporting the setup and optimization of HR software (e.g., Paycom, UKG).
  • Advising on software use for improved efficiency and compliance.

8. Administrative and Organizational Support

  • Providing administrative assistance for HR functions, including I-9 compliance and benefit document preparation.

Frequently Asked Questions About Small Business HR

Managing human resources in a small business can feel overwhelming, especially when resources are limited and employees often wear multiple hats. Whether you’re just getting started or looking for ways to optimize your HR processes, you likely have questions about how to navigate the complexities of hiring, compliance, and employee relations. That’s where we come in. At Lakeside HR Group, we specialize in providing fractional HR services designed to meet the unique needs of small businesses. Below, we’ve answered some of the most common questions to help guide you on your HR journey.

Yes, small businesses typically have HR functions, even if they don’t have a dedicated HR department. These tasks are often handled by business owners or employees who take on multiple roles. However, as a business grows, the complexity of HR responsibilities—such as compliance, employee relations, and benefits management—grows too. This is where outsourcing or fractional HR services can provide valuable support, allowing small businesses to focus on what they do best.

Absolutely. HR is essential for any business, regardless of size. For small businesses, effective HR management ensures that they stay compliant with employment laws, manage payroll and benefits efficiently, and foster a positive work environment. While HR may not require a full-time role in the early stages, outsourcing or fractional HR services can offer the expertise needed to keep things running smoothly as the business scales.

Managing HR in a small business requires balancing daily tasks like payroll and employee relations with strategic efforts like talent acquisition and compliance. For many small businesses, outsourcing HR functions is an efficient solution that brings in expertise without the cost of hiring full-time staff. Tools like employee handbooks, clear job descriptions, and reliable HR software also help streamline processes and reduce errors.

HR in small businesses tends to be more hands-on and flexible, with employees often wearing multiple hats. There’s a focus on day-to-day operations and compliance, but with fewer resources than large companies. In contrast, large companies typically have a dedicated HR department that specializes in different areas such as recruiting, benefits, and legal compliance. For small businesses, fractional HR services provide access to experienced professionals who can handle these specialized tasks as needed.

HR growth in small businesses often follows a gradual path. Initially, HR tasks are handled internally by the owner or key staff. As the business grows, outsourcing or fractional HR services can be introduced to handle more complex issues like compliance and employee relations. Eventually, many businesses invest in HR software to automate processes and may hire a full-time HR professional as they expand. Lakeside HR Group can help you determine the right time to transition from handling HR internally to leveraging outside expertise.

HR software can be a game-changer for small businesses, especially as they grow. While not always necessary in the early stages, HR software helps automate tasks like payroll, benefits management, and compliance tracking, saving valuable time and reducing errors. For small businesses looking to scale efficiently, investing in the right software can streamline HR processes and improve overall operations.
The best HR software depends on your business’s unique needs. There are many great options designed specifically for small businesses, such as Gusto, BambooHR, and Zenefits. These platforms offer features that help with payroll, benefits, compliance, and employee management, all at a price point that suits smaller budgets. At Lakeside HR Group, we work with clients to recommend HR software that fits their specific goals and growth plans.

Lakeside HR Group partners with small businesses to fill these HR gaps, offering outsourced HR solutions that are confidential, thorough, and compliant with regulatory changes. While many of these needs are sporadic and unpredictable, having a trusted fractional HR partner can save both time and money.

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Learn more about how Lakeside HR Group can support your business by joining our webinar: “Scaling Smart: HR Tips for Small Business“.

About Lakeside HR Group

We are a premier HR Consulting and Recruiting firm connecting people and businesses through personalized, full-service solutions. As a boutique firm of seasoned HR professionals, we specialize in providing customized HR services for small to midsize businesses. With expertise across diverse industries, positions, and states throughout the U.S., we partner with our clients to discover top talent and deliver the support needed to help their businesses thrive.

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