This article was contributed by Gabrielle Plumez, People + Culture Consultant @ Leath HR Group.

In the fast-paced world of small to mid-sized businesses, where every decision counts, the role of Human Resources (HR) often becomes overshadowed by the pressing demands of day-to-day operations. Many business leaders even take on the HR functions themselves. While this may sound like a good idea at first, it can often create bigger and more expensive problems.

Let’s explore the risks associated with not having an HR function, both from a financial standpoint and in terms of organizational culture which will be featured in our Part II. By understanding these risks, you'll gain valuable insights into the importance of a strong HR function for your business's long-term success. 

Legal Compliance: 

One of the most critical aspects of HR is ensuring legal compliance. Laws and regulations related to employment, such as wage and hour regulations, workplace safety, discrimination, and harassment, are constantly evolving. Without a dedicated HR professional, business owners risk non-compliance, leading to hefty penalties, lawsuits, and damaged reputations. The financial burden resulting from legal battles can significantly impact a business's bottom line.

Employee Turnover and Recruitment Costs: 

High turnover rates can be detrimental to any organization. Without a well-structured HR function, businesses may struggle to attract and retain top talent, leading to frequent employee turnover. Constantly hiring and training new employees not only incurs recruitment costs but also affects productivity and team morale. Seasoned HR pros can streamline hiring efforts making happy candidates and future employees.

Performance Management: 

Effective performance management is key to optimizing employee productivity and fostering growth. Without an HR function, businesses often lack structured performance evaluation systems, feedback mechanisms, and employee development programs. The absence of these essential processes can hinder employee motivation, diminish performance, and negatively impact overall business outcomes. Lost productivity and missed opportunities for improvement can translate into financial losses. 

We Are Your One-Stop Solution: 

At Leath HR Group, our team of Senior-Certified HR Consultants, each with 20+ years of experience, stand ready to provide personalized support and innovative solutions to cultivate high-performing teams. By trusting us as your HR partner, you can benefit from expert guidance in these costly areas of compliance, efficient recruitment strategies, and performance management. Minimize these financial risks and feel confident about your HR. Reach out today for an HR consultation at [email protected].