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Why Do I Need HR for a Five-employee Company?

If you own a small, five-person company, it might be tempting to think that you don’t need to invest any time or money into human resource functions like a big business. That’s a bad idea.

Every company needs HR, regardless of size. Just like how you don’t build a house without a proper foundation, a small business – or any business – needs to create a solid human resource foundation to succeed.

Image of a small business using a PEO for HR management.

Why Small Companies Can Benefit from HR Management

A common objection that a Professional Employer Organization (PEO) hears is that an owner thinks that their business is too small to invest money in HR management. Some businesses may have an office manager with HR experience, but it is difficult for one person to match all of the help a PEO can provide.

Certain HR laws may come into play at different employee milestones, but there are still basic HR processes that need to be in place whether a company has one employee or 100 employees. A PEO can ensure that your business has those processes ready. If there is a workers’ compensation claim, a PEO can handle it. If a former employee files an unemployment claim, a PEO can manage it. No company is truly too small for critical HR functions, and you don’t want to get stuck dealing with HR laws that you never thought could or would affect you.

Does Outsourcing HR Functions Mean You Lose Control of Your Business?

Investing in the Future with HR Management

Another major reason why it’s critical to invest in HR is that your business isn’t going to stay small forever. A five-employee company should eventually want to turn into a 10-employee company, and then a 20-employee company, and so on. 

A PEO allows you to shift your focus to core business functions rather than HR  processes. This allows you to focus on driving revenue and growing your business instead of payroll management, benefits administration, and other time-consuming tasks. Also, a PEO can do all of this for a set fee, saving you from investing in a full-time HR representative.

A Small Business HR Partner

PEOs can be a huge help to businesses, large and small. According to the National Association of Professional Employers Organizations, small business that use a PEO…

  • Grow 7 to 9 percent faster
  • Have 10 to 14 percent lower employee turnover
  • Are 50 percent less likely to go out of business

Investing in your business’ HR processes is a big step toward a more successful future. Contact us today to talk to one of our experts about how Group Management Services can build a strong HR foundation for your small business.

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