The short answer is—when it begins costing the company money. If your organization is out of compliance with federal and state ordinances you’re exposed to fines, which can reach thousands. Labor codes covering ADA, COBRA, and FMLA are examples of the many complicated regulations which change frequently. If you’re uncertain to the exposure your company faces—ask your attorney, but be ready to be scared.  Here’s three more ways a Human Resources department may save your small business money.


Human Resources can save an organization time, money, and lost recruiting opportunities. If your business is growing, continually adding productive people to your team is critical. An organized HR recruiting system can make all the difference in having enough of the right people on your team to maintain growth. And Human Resources can do more than recruit new hires—HR can train them. Beginning with orientation HR can continue training procedures with the development of procedural manuals and training checklists.

Record Keeping

Improper maintenance of employee files is finable. In the minimum files should contain application, resume, interview notes, W2, and insurance forms. A complete file will include performance reviews, pay increases, corrective actions, absenteeism, progress reports, training completed, and more. All of which could protect the business.

Benefits Administration

Benefits administration is taken for granted as part of HR’s responsibilities, but it’s not only about answering questions, and completing the proper forms, it’s about reviewing options for the company and the employees to be able to offer the best coverage at the lowest cost. A good benefits administrator can save a company tens of thousands of dollars annually by finding the best plan to fit the needs of the group.

Payroll is often outsourced today and many of the time consuming responsibilities of human resources have been made easier through specific Human Resources software, even so, if you have 50 or more employees one or two people may have a difficult time keeping up with all the demands.

If your employee files are unorganized, if no one is researching insurance coverage options, and you’re uncertain whether you’re meeting federal compliance standards—it will eventually cost you. These are all activities an HR department can manage. Sooner or later, as your business grows, the cost of NOT having a dedicated Human Resources department will be more than creating one. Does your company need an HR department?

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