Q. My small business is growing and we have lots of employee issues. I’m thinking of creating a human resources manager position. My administrative assistant has indicated an interest in the job. She is very loyal, currently handles the employee files and is a wonderful people person. I would love to reward her hard work. Do you think this is a good idea?
A. Do you think it would be a good idea to promote your administrative assistant, who has no knowledge of accounting, to accounting manager? Most CEOs would never consider this. You simply can’t have an accounting manager who doesn’t know anything about accounting.
Too many people think that human resources is a low-skill role that primarily involves paper pushing and can be done by essentially anyone. Nothing could be further from the truth. The functional area of human resources is no less complex than accounting. There is a mind-numbing list of things that a competent HR professional needs to know about including FMLA, COBRA, wage and hour rules, affirmative action programs, worker’s compensation, unemployment hearings, hiring guidelines, termination procedures and the list goes on. It is truly scary.
It can be very expensive to get these things wrong. For example, one mistake many small businesses make is to classify a group of employees as exempt (ones who do not receive overtime pay) that should be non-exempt (those that receive overtime pay). In such cases, the result of a wage and hour audit can be financially devastating. In addition to fines, your business will have to pay the overtime that it should have been paying. You may not have to go back many years for this to be a big number. Because you won’t have good records of the overtime hours worked by employees you thought were exempt, the auditors will estimate this number for you. Trust us; the estimate will not be on the low side. While the costs can cripple your business, the time spent on the audit and fixing the mistakes can be equally damaging.
For years, many small businesses have been able to fly under the radar. This is changing. The Obama administration has greatly increased enforcement efforts, so the chance of an audit is much higher than it was only a few years ago. Attorneys are now advertising on television trying to get potentially misclassified people to come forward. When it comes to most HR rules, small businesses are much better off being safe than sorry, but you can’t be safe if you don’t know the rules.
The answer to your question is an unequivocal no! It is not a good idea to put your wonderful administrative assistant, who doesn’t know the first thing about HR, in charge of that function without help. It wouldn’t be good for your company, and it wouldn’t be fair to her. You’d be setting her up to fail. Instead, pursue one of two options:
Hire a qualified HR professional – The best way to know that a prospective HR person is well qualified is to hire someone who holds a PHR (Professional Human Resources) or SPHR (Senior Professional Human Resources) designation from SHRM (Society of Human Resources). People who hold these designations have passed a test ensuring that they know the HR rules and regulations. Make sure that the designation is current. To maintain this designation, HR professionals have to meet continuing education requirements that ensure they remain abreast of changes in their discipline.
Get outside help – Many companies need professional HR help but can’t afford a full-time PHR or SPHR. In such cases, hire a fractional HR manager or a consultant. Again, make sure that your outside help has the proper designation and that it is current. Such a person can help your business establish proper processes and procedures to ensure it remains compliant. A less knowledgeable person (e.g., your administrative assistant) can implement the procedures. The HR professional will be available to help on an as needed basis and she/he can periodically review the work to ensure things remain on track. By the way, if your administrative assistant is truly interested in becoming an HR professional, you can follow this model while she attends classes and studies for the appropriate designation.
Human resource issues are important. Don’t take shortcuts that could cripple your business.