Hi everyone, and welcome back to the HR Connection. I'm your host, Sabrina Baker. Today's topic is one that no one seems to think about until it is too late, until things are so painful that they realize change needs to happen. And that is scaling HR as your business expands. Growth is exciting. It means your business is exceeding. Scaling, expanding its impact. But growth also exposes every crack in your HR foundation. Things that worked when you had 10 employees, they don't work at 40. And what worked at 40 is not going to hold up at 75. So in today's episode, I'm walking you through what it really means to scale HR, which is not just hiring more people, but building people's systems that are repeatable, sustainable, and ready for the next phase of growth. I'll share the key triggers that tell you it's time to scale, the three areas to focus on first, the mistakes I see most often, and my simple single recommendation for where to begin. If your business isn't growth mode or about to be, this episode is for you. When I say the words human resources or HR to you, what comes to mind? Is it a person? Is it yourself? Because maybe you're an HR leader, somebody that you've dealt with in the past, an HR team, maybe somebody you've had a bad experience with because they were the ones who had to communicate a termination, or a layoff, maybe it's somebody who you feel like always says no and takes away all your fun, lots of ideas about HR and human resources. But when I say that word, if what comes to mind is an individual, then I'm going to ask you to shift your mindset for this episode. Because today we are talking about scaling HR. And I am not talking about adding headcount to the HR team. I'm not talking about scaling an HR department. I'm talking about scaling HR infrastructure. The workflows, the policies, the processes that contribute to employee experience. As your business grows, as you scale upwards in your product, in your service, in your employee population, that HR infrastructure has to scale with you. When I talk about scaling HR infrastructure, there are five key areas that are important to think about as you are growing. You want to be able to think about where you are now, but where you're headed, where is your headcount going? How many employees are you going to have? And you want to put infrastructure in place that is going to scale with you. If you have ever been a part of a growing organization, maybe a startup, or a small business that grew very quickly, or even one that maybe didn't grow quickly, but we just didn't have the right HR infrastructure in place, then you have definitely felt pain points in one or several of these areas. So the first one is compliance. Obviously, as you scale, compliance requirements intensify. If you get to certain employee populations, certain employee thresholds, if you decide to suddenly hire employees in different states as you grow, then those compliance complexities become more intense. And you want to make sure that you have systems, processes, and workflows in place to be able to meet you wherever your compliance needs are. Number two, communication. The more people you have, the greater the opportunity for miscommunication, a lack of communication, communication that doesn't cascade down from leadership to the employee level, I will tell you that I spend all of my time in leadership development. I spend my time doing focus groups and surveys and nine times out of ten, communication bubbles up as a top concern from employees. As you grow, when you're when you're eight, ten employees, it's really easy to make sure everybody knows everything they need to. When you're 80, when you're 250, that becomes a little bit more difficult. So you want to think about the communication processes you have and make sure that they are scaling with you as well. Number three is culture. I've done a whole episode on building culture. I believe that culture inside of small employers is both organic and can be deliberately built. It just does take somebody being deliberate about it. But as you grow, it's easy to lose sight of that. It's easy to let behaviors happen. It's easy to overlook things or not be driving the type of employee experience or the type of relationships, the type of communication that you want employees to have. And if nobody is driving that as you grow, then something is likely going to organically grow that may not be what you intended. So culture is one of those things that has to shift and change as you grow. The culture that you have when you are a scrappy startup with 15 employees is not the same culture you're going to be able to have when you are a little bit more established and you're 90 employees. So culture is something that you have to think about. Those core values can say, but you have to think about how you're going to grow and develop that as things progress. Number four, processes and documentation. When you are super small, lots of things live in people's heads. If you are part of a startup or a newer business, then there's lots of things that just happen in people's minds, and maybe they're not documented. Maybe there's no SOP or a workflow or structure. I'll tell you that I am somebody who does not love documentation. I know that's wild to hear from an HR person. I understand why we need it. Um, but I know even in my business, as I have grown, being able to document processes, get them out of people's heads, and get them into a workflow that can be replicated and scaled. It's not so much about locking people down to a way of doing things. It is about giving people the opportunity to read through documentation that allows them to repeat the processes that are working really well and then scale the business from there. So processes and documentation, you have to look at, yes, they're working now when we're 20 employees, but what are we going to do when we have hired 25 people this year and now we're at 35, 50 employees, whatever the number is? So you want to make sure that those processes and those documentations that they get more structured as you grow. Now here's the thing I always have entrepreneurs push back and say, I don't want structure, I don't want structure. You have to have structure. You have to have structure in your business, but you can have structure without rigidity. I think when I talk to people, what I hear is what they're really saying is I don't want the rigidity. I don't either. I want my people to be agile. I want us to be able to pivot, but the structure is important as you continue to grow the business. And then the last thing is leadership development. We do a lot of homegrown leaders in small employers. We do people who maybe joined us in the beginning and we just kind of move them up and then they they become what I call homegrown leaders. Maybe it's their first opportunity to be a leader. They've never really had any training. And leadership skills, while you can have people who have a natural instinct and are better at some things, they are still, it's still something that needs to be developed. And I always say that there's never an end goal. There's never a time when we say, you're the best leader you can be. There is always something else to learn, always something else to improve upon. And if small employers would focus on leadership development earlier and make make sure that their leaders are all on the same page with how the organization is going to be led, especially as it grows and scales, then some of these employee relations issues that we see pop up and your higher numbers of employees would be lessened. So there's your five categories of things to look at, things to make sure you are scaling as part of your HR infrastructure as your business scales. Compliance, communication, culture, processes, and documentation, leadership development. Now let's talk about the triggers. What tells you as an HR leader, as a business leader, that it's time to look at those things and ask yourself whether they are going to scale with where you are going. What are some things that might trigger you to say, ooh, we are growing here as an organization. I need to make sure that our people experience is growing with it. The first one is headcount numbers. Especially when you think about compliance, when you hit 25, 50, 100 employees, you have different compliance requirements at those thresholds. So when you are growing employee population, that is definitely a trigger to go back and look at your HR infrastructure and say, okay, this is something we probably need to think about. I don't know why this is. This is extremely anecdotal from my experience. I have no science. I have no math. I have nothing behind this. But I will tell you that in scaling small employers for 14 years now, that for some reason, 60 employees? That is the number where this shit hits the fan. I don't know what it is. But it's something around 60 where the employee relations issues seem to get a little out of control. And so another trigger, employee population of course is one of them, but another trigger is when you have leaders who are struggling to lead the number of employees. You have, you're starting to see these cracks in team dynamics. That is definitely a sign that your HR infrastructure may not be scaled to the level of your employee population. So thinking about employee population, not just from a compliance standpoint, but also how are the leaders leading the number of employees that we have? And is there a time when we start to see these team dynamics, these interpersonal relationships of the employee relations issues? And we start to see those struggle a little bit, that is our sign that we may not have scaled our HR infrastructure appropriately. A few more triggers would be that things like payroll and leave of absence and benefits take away too long. As you grow, these should be streamlined. They should become like well-oiled machines where you have processes in place, you have workflows, you know what happens the minute employee says, I need to take a leave of absence. You are payroll is being ran mostly error-free. Um, it's a pretty standard process. You know every other week or semi-monthly, whatever your your cadence is, you know the payroll process. It's being ran. Um, and as you grow, that should get more and more streamlined. So if you have those HR pop practices, like leaves of absence, benefits, those things are taking a lot of time. Then what that says is we probably haven't scaled to the employee population that we have. And we need to look at those processes. We need to look at those workflows and we need to say, how do we improve these to meet the demand of the employee population? A big area that we see, because sometimes we will come into a client and they have 60, 70, 80 employees and we are their first HR team. So as a fractional support team, we're the first one. So one of the things that we see as a trigger that their HR was not scaled or, quite frankly, even created in the beginning is that employees are not clear on policies. They're not clear on job processes and they have no idea who to go to with those issues. So maybe they don't understand their PTO policy, or they don't understand their benefits, or they they are having payroll errors and they don't know why and they don't know who fixes that. So when you have this this ambiguity, you have policies in place maybe, but there's this ambiguity around what those are and employees aren't clear on those, then that tells us that we have not built and scaled our HR infrastructure correctly. And then the last trigger is that you are doing a whole lot of recruiting, but there is no consistent onboarding process in place. There's no consistent training. And so your employees, your new employees have this long ramp-up time. In a small employer, you cannot afford a longer-than-necessary ramp-up time. Now, ramp-up times, of course, are determined by your business, and some businesses are going to have longer ramp-up times than others. So there's no standard metric here. But if you think that employees should be ready to be on their own and managing their tasks in 30 days and you see that it's taking 60, then there is some inconsistency in the HR infrastructure around onboarding and training and new employee development that is not scaling with what you need and where you are now. So that a lot of recruiting is often a trigger to say, we have all of these people coming in, what do we do with them? How do we make sure that they are having the experience that they need in an onboarding situation, in a training situation, to get them ramped up when we need to so that they can be contributing? Obviously, in a small employer, every headcount matters so strongly. And if you are taking more time to do these things, then it's just hitting you in your profitability and in your ability to scale even further than where you are now. So if any of those pain points sound familiar to you today, it might be time to scale your HR, so how do we do it? We have our five categories from earlier. We know the triggers. We are feeling those pain points. Now, what? Let's break those five categories from earlier down into three major steps of places that I would encourage you to start to really be thinking about how you scale your HR. The first one is processes and systems. This is your foundation. There is the back of the house HR and there is the front of the house HR. Back of the house HR is your processes, your systems that contribute to how employees experience the workplace from a tactical standpoint. These are onboarding and offboarding. If you do not have a process for onboarding and offboarding that is consistent, that sets employees up for success, that is compliant on the offboarding end, then I would start there. When we think about clients that we bring into the business, if we are building everything from scratch, one of the things that we will start with is onboarding. We are going to start with how do we bring people into this business? How do we set them up for success? How do we encourage them to integrate themselves and make sure that they have everything that they need, all of the tools that they need to make sure that they are successful here? So we start with onboarding and offboarding. And if you feel like you are going to be adding headcount, I would look at your onboarding process and say, is this going to scale with us? Is this something that we can sustain as we add more people? On the offboarding side, it has to be consistent. It's not just about compliance to there when I talk about offboarding. It's also like, how do we decide if we are moving people out of the business? What are those triggers that that tell us we need to move people out of the business, which leads me to the second thing after onboarding. It's performance reviews. And I'm not talking about an annual performance review. If that's not what you want to do, but I'm talking about some kind of feedback loop. When you are working in a small employer, everybody has to carry their weight. And sometimes they're carrying the weight of two or three people. And if we are not consistently giving each other feedback on how well we're doing that, things will never improve. So you have to have some type of feedback loop. We have clients who do traditional annual performance reviews. We have clients who do quarterly reviews. In my own business, we do an annual development review in January that sets them up for the year. And then we do quarterly reviews where we are talking about what they've done in the past quarter towards the goals that we set early on, both personal and professional. So from a professional standpoint, the goals that they're trying to achieve in the business, from a personal, it's more around soft skills. I'm not asking them to tell me about their personal life goals. I'm asking them to talk about soft skills. So onboarding and offboarding is first. Let's make sure that we have a process and a system that scales with the growth of where you're going. And then the second one is performance reviews. Let's make sure we have some kind of system, some kind of mechanism for regular feedback so that employees know where they stand. They know how to improve, and they are given the development to do that. The third is systems as far as internal HR systems. If you are still managing your payroll, your HRIS in spreadsheets, and you are growing, that is not going to be sustainable. If you are figuring everything out in Google Docs, um, or Google Sheets, nothing wrong with having things in those spaces, but if that's your entire HR system for payroll and performance reviews and bonuses and all of these things, then as you get higher in the employee population, that is not going to scale. So it is crucial that you look at an HRIS system. I did a episode a couple of episodes back about HR tech. And, um, the fact that we recommend an all-in-one for small employers. So getting that all-in-one kind of true north system where you can scale as you grow inside the one system, and it can have your onboarding in there and your recruiting in there and your payroll compliance, of course, and your surveys maybe even and your performance reviews, whatever it is, but you have that all in one place. But if you are still managing everything in the spreadsheets, I promise you that as you continue to grow, that is not going to be sustainable. And you're going to have more errors. You're going to spend a lot of time on stuff that you don't need to, and you're probably going to have more errors, which just leads to poor employee morale. And then the final thing as far as systems and documentation and policies is that documentation. And let's make sure we have a really good handbook. Let's make sure that that handbook scales with us. And what I mean by that is sometimes when we are really small, we can be more generous with our HR policies than we can be when we grow. I have seen clients come to us and they were having a very generous leave policy, very generous. Vacation policies, very generous expense or bonus policies that as they grew, the business could not financially sustain. So it is really important as you are adding big groups of headcount that you look at those policies that have a financial impact and say, can we scale with us? Do we need to make some adjustments here? Because while we can afford this at 15 employees, I can't afford it at 50. So you need to be thinking about the policies that you have in place. First of all, you need to be documented, but also you need to look at that documentation and say, does this scale with us? And are we going to be able to sustain this? The other thing is making sure that we have just general HR workflows documented. We know what happens when somebody needs a leave. We have all that right paperwork. We have those templates, offer letters, whatever it is, so that we are consistent. And then again, that that material is scaling with us. This is your foundation. Those four areas, if you could do nothing else, let's start there and make sure that they are going to scale with you. The second core area that we want to focus on is people and roles. Whether you are an HR department of one, a business leader managing HR, you cannot scale HR alone. So you are going to need support. That support can come in the, um, form of an HR person if you don't have one in your organization already. It can come in the form of fractional support. If you are an HR leader and you know that the business is growing and you are an HR department of one or you're somebody who's doing HR alongside your other day job, then you are going to want to look at, can I continue to manage the people infrastructure that we have in the business by myself? Or while I'm doing these other things, at what point do we need to bring in extra support around the HR side to handle this infrastructure? Now, I know I said in the beginning that when I talk about scaling HR, I'm not talking about a person. It doesn't have to be an HR person. You can build HR infrastructure without an HR professional. But they need to know all of those areas I talked about before. They need to understand compliance. They need to understand the communication and culture and how to build those things. So it doesn't necessarily have to be an HR person per se, but it needs to be somebody who understands building HR infrastructure. The second part of roles and people is clarity around roles. When we are small, people wear many hats. There is some overlap in who does what. Sometimes this person might do it, sometimes this person might do it. As you grow, you have to provide that clarity. You have to be able to give people a defined job description. There's always nuance, of course. There's always that ability in a small employer to say, hey, we're going to pivot this or we're going to develop here. But for the most part, the bigger you get, the harder that becomes. So you want to really clarify who is doing what. If you are adding layers to your business, meaning that you are adding middle managers, VPs, a C-suite, you want to make sure that there is a clear division of duties between who does what so that people understand their role and how it contributes to the bottom line. We come into clients all the time that don't have that. There's kind of people just doing a little bit of everything, a hodgepodge of this and that, and I'll say, aren't you an accounting? And they're like, well, yeah, but I also do product development. And that just means that people are splitting their brains and nobody can do that well for a long time. So as you grow, you have the ability to really focus people in where they work best. Focus them in where their skill set works best. So you want to be able to provide that clarity, that division of duties as you are scaling and get more succinct with that every single time you are adding headcount. And then the third thing in this section of people and roles is leadership development. I mentioned it. It's huge. You, at some point, have to realize that just figuring it out, just figuring out the leadership stuff, no longer works. And you have to be able to provide your leaders leadership development in the way that they can handle some of these people issues, handle conversations. I'm just going to say a hot take, and people might disagree with me, but I think that that people use human resources as the bad guy quite a bit. We come in and we have to have the tough conversations. We have to do the terminations and the layoffs because people aren't comfortable. And they aren't equipped with how to do that themselves, other leaders. And so they call HR in to do it. And we're kind of a scapegoat. I would say that if the earlier you focus on leadership development, the better your organization is going to be and the faster I think you're going to grow. That doesn't have to be complicated. You don't have to bring somebody in to do this huge leadership development course. You can do a book club. You can all read a book and talk about it. That's focused on leadership. It can be very simple. You can, you can carve out 30 minutes of your leadership team meeting to talk about some soft skills and how things can be improved with the the wealth of information on the internet today and what you can find on ChatGPT and other places. Leadership development can be simple. It's not always about the content that you deliver at leadership development. It's about what they do with it and how do you hold people accountable to actually developing in that area. So when we talk about people and roles, this is certainly about giving that clarity to your frontline employees, but also developing leaders to help them better lead them. The last core area that you want to focus on as you think about scaling HR is culture and communication. When we scale HR, we don't want to just scale operations. We want to scale connection. When you are super small, it is really easy for everybody to feel connected to both what they're doing to each other and to the organization. But as you add people, that gets a little bit more difficult. And so we want to make sure that we are focusing on things that not just scale the internal processes, but also scale the way that people are connecting with each other. So I have three ideas for how you do that as well. The first one is to clarify your core values. As you grow, your core values will change. The core values that you had at 15 employees probably are not the same that you have at 150. So if you have not reviewed your core values in a while, you're going to want to do that. You're going to want to review them and say, how is this modeled? Is this being modeled? Should it still be modeled? Does it make sense for us? You want to make sure that once you hit some major milestones of employee populations, that those core values grow with you. And if they don't, it's time to revise them. You do not have to stick with the same core values you had at day one. If they still make sense, fantastic. If they don't, that's okay too. We had a client recently who was around during the Great Depression. And some of their core values were from that time. And we looked at them and I said, this is amazing, but I just don't know that it makes sense for you anymore. I don't know that this is where we are, that this is the same time. And what employees are looking at and what they value. And so they were able to really look at their core values and say, yeah, we probably need to revise these a little bit. So your core values really should be driving behaviors. This is how you drive behavior. This is where you should have your leaders modeling. So if you have not looked at your core values in a while and you've gone through some growth spurts or you're about to, it is time to revisit them. The second one is internal communication. This kind of goes along with performance reviews, but this is more around just how the cadence of communication. Are we having one-on-ones? Are we having all-hands meetings? Is there some feedback loop where not only are we giving feedback to employees, but they are also able to give feedback to us? Are we encouraging communication at all levels? There's something that I always say in leadership development, which is if you don't communicate to employees, they don't assume you don't have anything to communicate. They make it up. They will make up some other communication that probably isn't true. This is why you have gossip and all of this stuff running around wild in certain organizations. And it's because leaders are not communicating well. And when you don't communicate well, people don't just assume there's nothing to say. They make it up. They just dream up something that can be completely untrue. I think we see that in our society. And it definitely happens in our workforces. The last one in this category of culture and communication is around being intentional about culture. So thinking about you, if you are a CEO, founder, or a business leader, um, really hear me on this. It is up to you to think about the type of environment from a culture perspective that you are trying to build for your employees and then drive towards that. And so if you are experiencing a workplace where behaviors are not what you ever wanted, we're not communicating well, we're not treating each other well, we are not acting how you wanted, your vision for having employees and how you wanted them to navigate their day. Then you have to write that shit. You have to think about what can we do to improve the culture so that employees can thrive. When employees thrive, the business thrives. And so you want to make sure that you are focused on that culture, communication piece, and that you're being really deliberate in the types of behaviors that you are modeling and expecting out of your employees. There are three mistakes I see most often when we are scaling HR. And when you have these mistakes, when you when you feel the pain from these, it can be really difficult to call out of. So let me tell you what they are. So hopefully you can avoid them. The first one is waiting way too long. Rather than think about this stuff early on, rather than think about how do we scale this HR infrastructure, we wait until it is almost unrepairable. We wait until it is so beyond broken that the pain of it is excruciating for everybody involved. And so we don't think about onboarding processes. We don't think about any of these things and we just keep saying, well, we'll do that later or we need to do that when we're bigger. We think that those are bigger business problems and they are not. They are every business problem. And so if you are waiting and you really long time to think about your HR infrastructure, then it is going to become excruciating at some point and you're going to be forced to spend a lot of time fixing it. The second one is hiring HR with no support. If you have never had human resources and you are you are bringing somebody in to hopefully focus in these areas, focus in compliance, focus in infrastructure and strategy, and you are giving them no support, you're expecting one person, and especially if that person's doing other things as well, to do everything with no authority, no financial budget, um, and no help from anybody else, then it's all going to fail. One person absolutely cannot do that alone. You can have an HR department of one. You can have one person managing your human resources. You can have, if you're super small, your, uh, finance person also handle HR if that makes sense for you. But you need to give them the support and that all leaders are going to help build some of these HR infrastructure pieces. That they're all going to have the component. They cannot do it alone. And if you are not giving them any kind of budget for an HRIS system, or maybe a rewards and a recognition program, then your business is just going to suffer long term from an employee standpoint. So second mistake is definitely having HR, but not really giving them any support. Seeing them as potentially compliance only, just make sure that I'm legal and not thinking about all these other components that go into HR infrastructure. And then the third mistake that I see, which quite possibly is the most painful, is no organizational planning. We are living in the here and now and we are not thinking about six months, one year, two years, five years from now. There's no succession planning thought. There's no as we grow to this number, here's what the departments could look like. Here's what the layers of leadership and employees could look like. We have clients who we will go to them and say, hey, I'd love to hear your annual business goals because we want to align our HR, um, goals and what we're working on with those. We want to help you achieve your business goals. And then they'll look at me and say, I don't have business goals. And the longer that there is no org planning in that way, the the bigger the opportunity for your employee experience to just implode on you. And you have just a space where either you are dealing with very high turnover, very low morale, very low engagement, and of course, all of those things lead to less profitability, less ability to grow, less ability to scale. So if you are not both living in the here and now as a leader and talking as a business leader, I get that what I'm saying is difficult to do, but living in the here and now and making sure that you're working through where you are today, but also thinking about what the next phase is, thinking about when you get to this number, this is what succession looks like, this is how the departments break out, this is what we're going to be doing. Um, then you can better scale your HR because you know where you're headed. So here's your takeaway. Scaling HR is not about just adding an HR person or reacting faster to what's going on. It is about building structure that supports your people as you grow. One very simple thing you can do today to start on this is to think about any HR bottlenecks that exist. Is there a place? Is it onboarding? Is it feedback? Is it in a performance development? Is it in leadership development? What is one area, one bottleneck in HR infrastructure that you are experiencing? And then what is one simple step you can do to try to fix it? The more you do this, the more you think about where are those bottlenecks or where are we going? The better you are going to be at scaling your HR systems as your business grows. I would love to hear from you on this. I know that this is something that if you haven't done it, it can feel a little daunting. Um, it can be really unsure of where to start, which is why I say let's just find one bottleneck, find one place that feels a little rough right now and how can we move that out. But I'd love to hear from you. You can send me a message. I would love to hear your thoughts on this topic. It may be something that you have done. If you are inside of a small employer and you are managing HR, I'd love love love talking to you. Um, so if you have thoughts or you have things that you have done I would love to chat with you about that. We'll have an email in the the show notes for this episode and you can reach out directly and maybe you can feature you on a future episode. Thanks for listening to the HR Connection. See you next time.