If you had asked me 14 years ago when I started this business, what good HR looks like inside of a small employer, a one to 500 employee population, my answer would have been vastly different than it is today. I probably would have oversimplified it and said, just do what you do in a large business, but scale it down to the size, the budget, the resources that you have. And that is simply not enough information. So in today's episode, we're going to talk about what I now think after doing fractional HR support inside of small employers for 14 years, what I now think good HR looks like. My name is Sabrina Baker. I am the CEO and founder of Acacia HR Solutions and the host of this HR Connection podcast. The place solely dedicated to those managing human resources in a small organization, one to 500 employees. Before I share with you what I now think managing HR in a small environment, what good HR looks like, in a small employer, I first want to give you a little bit of background about myself. I spent 11 years in corporate HR environments. These were all in very big business, 3,000 to 125,000 employees. I was in my latest and my last corporate role, the director of human resources for a call center company. I had domestic and international call centers that reported to me. I traveled all the time. If you've ever worked in a call center environment, we should write a book. It is wild to say the least. But I did that for seven years, and in 2010, I went on maternity leave with my first and only child. Uh, he was precious then. He is now 15. I could use some help. Teenagers are something. That's all I can say. Uh, he is my only one and, uh, of course, I adore him and love being a boy mom, but my goodness, the teen years are wild. Anyway, I went on maternity leave in 2010, and before I could return, probably about three weeks before I returned, my boss called and said, you know, we, uh, have been hit with some layoffs over the last couple of years. We in HR have never been hit because we ran lean as an HR team. I'm sure some of you can resonate with that. Um, but now we have been. I've been asked to lay off one of my directors, and I choose you. And just like that, I was holding a three-month-old, and jobless, and not sure what the heck I was going to do next. I have such respect for stay-at-home parents. Let me just be clear. I have so much respect, and I think they work really, really, really hard. It is just not in my DNA to be able to do that. If my son were here, he would tell you that Camp Mom at the Baker household, not a very fun place to be. And so I knew that I wanted to work, but I also wanted to balance his life. I wanted to be able to go to the school plays and the doctor's appointments and not have to have this discussion with my husband every time around who was going to take off. And so I spent some time to figure out what I wanted to do, and I went to a luncheon, a community luncheon, trying to network and meet with people. And a small business coach was sitting next to me and she said, you know, small businesses could really use your help in human resources. They they don't usually have full-time HR staff. They have maybe somebody who's not really an HR person handling HR. And I think that you could have a business here. And so when I tell you that literally on a whim, I decided to start a business, literally on a whim. I just went home that day and told my husband, this is what I'm going to do, and he said, okay, sure. And I did it. And I had no idea what it would look like 14 years later. No idea. I did it very part-time in the beginning, working around my child's schedule in nap times. I mean, I had a baby and a toddler and, and, uh, there were weeks I probably didn't work at all. I had no idea no plan. There was no five-year plan. There was no budget. It was completely bootstrapped. And 14 years later, here we are. But the thing that I knew back then is that I wanted to focus in on that small space. I wanted to work with startups, and I wanted to work with small employers, and I wanted to to help them navigate human resources because that's not usually a function that they have internally, especially if they're on the smaller end of that population. And so I did. And again, back then, had you asked me, what does that even look like for you? What does good HR look like in a small employer? I would have just thought that I could take all of that big business knowledge and dial it down. And I think I even said that. I think I said, you know, we're just going to take all of this large employer knowledge that I have and scale it down to a small environment. And the more clients I worked with, the more I realized that shit does not work. It does not, does not work. It's not a one-for-one scale. You can't just take um an HR process or workflow that works in a 10,000 employer space and scale it down to 20 employees. It does not work that way. And so I I had to figure it out. I had to learn. And I am not a person who um shies away from failure. If I make a mistake, I make a mistake. It's, you know, something that I've learned uh then away not to do it. And so I just keep moving. And over the years, I have really refined, especially now that we have a team, I have really refined what I think good HR inside a small employer looks like. And what's maybe more important about this is that I think a good number of small employers don't have it. So let's talk about the components of HR. It is amazing to me sometimes I go through the sales process with potential clients, and when I talk about all of the things that we do and the way that we're structured and the things that we can do for clients, they are often amazed of what I include in human resources. They often think of HR as a strictly compliance administrative function. Pay my people, get their benefits, manage their leave of absence, uh, just strictly admin. And while I agree that at our core, that is what we were designed to do. If you go back and look at the history of human resources and why it was created and what it was intended to do, it was a very compliance admin-driven function. I believe that what we have evolved into is something that is so much more capable to help drive business. And in a small employer, we have such a unique opportunity to do that in a very personalized way. So here are the ways, here are the components that the way that I look at human resources, the three different areas of HR in a small employer: you have HR strategy, HR infrastructure, and HR compliance. I always say that strategy informs infrastructure, and infrastructure builds on compliance. So let's break each one of those down. First is compliance. Obviously, that is the legal nature of what we are doing. You are talking about labor laws. You are talking about, uh, making sure that you are paying people fairly, that you are administering benefits correctly, you have your federal and your state laws, your country laws if you're talking about international, uh, you are navigating the legal compliance and also just the documentation compliance, just making sure that people are being treated fairly, consistently, and in accordance with the law. So compliance is the easy one to understand. That's the one that most people think of when they think of human resources. Infrastructure is the policies, the processes, the workflows of how we accomplish the compliance piece or how we accomplish the strategy piece. So infrastructure is your workflow for payroll. It's your your process for benefits and your open enrollment process. It's how employees request time off. What is the time off policy? All of that goes into the infrastructure that dictates how employees navigate their employment. This is the employee experience. This is what they are doing when they are interacting with any um area of human resources: benefits, payroll, onboarding, recruiting, performance management, offboarding, the the process, the workflow that they go through. That's infrastructure. And then strategy is the overall goals of human resources. That should align with the business strategy. So there should be, in all small employers, in good HR, there should be an HR strategy in place that is consistent with and helping the company achieve the goals that it has set forth. A lot of times, what I see in small employers is you have a very compliance-heavy function, or even maybe a compliance-heavy with good infrastructure, but absolutely no strategy. And when I think of good HR, it definitely includes all three of those: strategy, infrastructure, and compliance. So let's talk about what I think good HR looks like inside of a small environment. The first and biggest opportunity that I see is that human resources should be seen as a driver of business, not a cost center, not an administrative function, but an actual driver of business. And there is a variety of reasons for this, but the biggest one that I'll give you is that inside a small organization, very um small acts, small issues are felt in a large way. If you have one toxic employee, they can really derail the entire organization. Not just a team, not just their peers, not just the people they're working directly with, but the entire organization. If you have one compliance issue that is out of compliance and you're caught, that's a really big cost to the organization. That can be detrimental. If you do not have good workflows or processes in consistent workflows and processes for things like leaves of absence, things like payroll, uh, then not only can it be costly, but you're also affecting morale and engagement, and your ability to hire in the future. And so when you look at HR as an administrative function only, as a cost center, and you have them just process paperwork, you are missing out on a huge opportunity to have another driver of the business. In a small environment, human resources is just as important as marketing, as finance, as all of those. I will die on that hill. It is just as important as the other counterparts that are trying to build and grow your organization. And so the first thing that is so important to us when we are working with clients is to make sure that we are seen as a business partner. We are included in um what they're doing in their business goals, that we understand what those are so that we can make sure that everything we are putting in place aligns to that. Because if not, we're wasting a lot of time, both ours and theirs. Now, if you are listening to this and you are managing human resources in a small environment and you are saying, "Yeah, my company does not do that. They do not see me as a business partner. They do not see me as anything other than a cost center or an administrative function," I got you. In future episodes, we are going to talk about how you can work to shift that mindset. I sometimes see that the reason for that is because the leaders who are running that business, they've never worked with good HR. They've never had HR as a business partner. They don't know what that can look like. And so we, as the HR professional, can actually go in and change that mindset or work to get them to see us differently. There's some tips and strategies that we use with our clients that I'm going to share with you in an upcoming episode very soon. The second component of really good HR in a small employer is that the HR strategy, infrastructure, they align with the business goals. We are not just throwing things at the wall. We're not just putting things in place because we think it makes sense, but we understand, just like the other leaders do, that this is where the business is trying to go. These are the goals that they have. This is the environment they're trying to build. This is the um revenue they're trying to achieve. This is the products they're trying to launch, whatever it is. We understand those goals, just like all the other leaders, the heads of marketing, the heads of um product, the heads of finance, whatever it is. We understand those at the same level that they do, and that we are putting in place strategy and infrastructure that helps drive those goals. How are organizations going to meet the goals? How is a small employer going to get to profitability or launch a product or um you know do whatever it is that they're trying to do? They're going to they're going to get those places by the people inside of the organization. And so therefore, the strategy and the infrastructure that HR puts in place has to align with those goals. So let me give you an example from my own business. Um benefits are something that all businesses feel like they have to have, right? In order to be competitive in today's market and to hire well, you should be offering benefits. That's what we think. And while I, for the most part, agree with that, I also think that you have to think about business goals size capability and the staff you have inside the business. So when I looked at my staff and whether I wanted to add all the robust benefits medical, dental, vision, all of those things, um I looked at the people I have. I looked at the goals that I have for the business. I looked at the budget that I have for the business, and I realized that while I could roll that out, I could offer those things um it was going to be a financial burden on the business as benefits are for many small employers. They're they're a financial burden. And so I uh looked instead at alternative options. What else could I do? I also knew that looking at my staff, most of them didn't even want benefits. They have benefits through their spouse or through a partner, something else. They just really didn't need benefits through us because we're a small employer. We weren't going to be able to get very great benefits. We were going to get some um you know pretty basic benefits with probably some high-cost associated to them. And so I looked at alternatives, taking all of that into effect, taking into the business goals that we have, where we're trying to go, where we're trying to be financially, what we're trying to um achieve from a you know employee engagement and culture and wellness uh platform inside the organization. And decided that rather than offer the traditional uh benefits where only those who really need that are going to participate, and it's going to create this really big financial burden on the organization, I'm going to offer something different. And so we do a QSERA inside uh my organization, which is a qualified spending plan where all employees, regardless of whether they have benefits somewhere else or not, can get reimbursed up to a certain amount of dollars per month for many different types of medical expenses, even just going to CVS and buying some cough medicine. They can get reimbursed for that. That is a a strategy and infrastructure piece inside of our business that aligns with business goals. The traditional way of doing HR says offer benefits. It says offer medical, offer dental, offer vision, pay for as much of it as you can. And if you have the budget and the resources to do that inside of your small organization, and you have the person who can manage your open enrollments and do all those things, great, do that. If that's what you want to do, you know it's going to be a big boost to your employees, and you know that it is going to help you achieve the types of goals that you have because it's going to attract the right employees. It's going to incentivize and motivate the right employees. Great, offer those. But if not, don't. There are alternatives. And so a lot of times what happens is we come in just like I did when I first started the business and I thought, oh, I'm just going to take what I know from big business and I'm just going to apply it to a small business. And if I did that, I'd be offering traditional benefits. But I look at the goals of the business. What are we trying to do? What type of people are we trying to hire? What type of revenue are we trying to achieve? Put all of that together and then make decisions, make HR strategy, build HR infrastructure that aligns with that. We will meet from time to time HR professionals in small environments, and they'll say, oh, I wish we had the budget for X, or I wish we could do this. And when I ask them why, it's simply because that's what they think they should do. Not because they know that employees will want that or will benefit from that, or not because they believe that it will help the employer achieve their goals. Just because they think it's the right thing to do. And then when we dig deeper and we say, well, how would putting this in place help the employer achieve X? Or how would it really benefit and motivate employees? Do you know that it would? We find out that whatever they're thinking is probably not the right strategy in the first place. It's just something that they believe makes sense. So really good HR is in tune with the business goals. They understand it to the level that other leaders do. They know where the business is trying to go. And when they are putting strategy in place, they are coming at it from, here's the goal we're trying to achieve. Here's the people that we have. Here's the type of people we want to um attract and retain. Here's how we want to treat them. Like here's the engagement we want to have with them. Here's how we want them to feel. By being employed with us, and therefore taking those two things into account, this is the strategy I'm going to set forth. Number three, the next component of really good HR in a small employer, I just touched on it a little bit, but it is personalization. You can be so much more personalized in a small space than you can in a much larger one. And so when you have an HR leader who is able to get to know every single employee, get to know them um at an appropriate working relationship level. So certainly don't have to be inside all of their business, and I wouldn't suggest that you are, but when you are able to understand personalities, understand the type of people, what motivates them, what keeps them engaged, what is going to help when things are really stressful, when people are getting burnt out, when we are asking people to wear multiple hats, when you're able to to customize and personalize your offerings. And I don't necessarily mean you have to have different vacation policies or leave policies for all of these people, but I do think that thinking about the the employees that you have, the leaders that you have, their personalities, their way of communicating, their style, and being able to adjust to that can be an absolute game changer inside of a small organization. When back when I was in the thick of client work, so when I first started the business, I managed all the clients, and we didn't have a lot back then, but I managed them all. And as we started to grow, I continued to manage clients. And I would have days where I was back to back with different clients. And at the end of the day, I would joke that I felt like I had multiple personalities. Because I would go into one meeting with one client and be one way, and the next meeting with the next client and need to be a different way. Some are very formal, some are not. Uh, some cuss a lot, some would never um some think about their business this way, some think about it that way. And and I would adjust myself to show up however they needed me to. And I think inside of a small employer, really good HR has to do that. I'm a huge personality junkie. I love uh I'm certified in Myers-Briggs and Hogan, and I I love all of the different personalities things, DISC, Enneagram, StrengthsFinders. You name it, I've done it. I love all of them. Um, and I think that when you understand people's personalities, when you understand how they show up in the workplace, and you kind of adjust to that, especially in human resources, especially when we are sometimes dealing with some super sensitive um and what can be for employees very anxiety-riddled experiences like a leave of absence or their paycheck is wrong or something. When we can adjust to them, the way that they like to communicate, the way that they like to show up, that experience, that employee experience becomes so much more meaningful. And in a small employer, um a huge currency that is needed at all times is loyalty. And when you have an HR leader and really, I think this applies to all leaders, but definitely an HR leader who is adapting, who is um really personalizing their service to the unique individuals they have inside that organization, it is absolutely changes how everyone shows up. I also think it's a really cool way to model behavior if you're trying to change um something that's happening in the workplace, modeling that is always the first way that I would I would suggest you start. Um, but that personalization, you don't get that in a large org. A big HR uh CHRO of a 10,000-person company is not going to personalize and have these personal relationships with every single employee in the organization. But in a small environment, you can and have to, you often force to, and when you are personalizing the things that you're doing, to uh employees, I think it can be such a unique way to have this camaraderie and have this kind of almost rallying around each other uh to make sure that everybody is working towards the goals that the business has. So the fourth characteristic of really good HR in a small environment is that the person managing HR has to be a generalist. They have to know a little bit about a lot, of areas of human resources. It is unreasonable to think that they would be an expert in all of them, but I do believe they have to have a little bit of working knowledge in all of the disciplines of human resources. I think there are nine disciplines when we think about onboarding and then hiring, performance management, benefits, payroll, um all of those things. Nine disciplines, and I think that it really strong HR person managing human resources inside of a one to 500 is going to know a little bit about all of those. Again, you can't possibly be an expert, but you have to know enough. I'll give you an example from my own experience. I hate benefits. I hate them with a passion. Anybody who knows me, if you were to ask my team what area of HR does Sabrina hate, they would say benefits. Without hesitation. I can't stand it, but I know enough to get by. If an employee came by and asked me a question, I could probably answer that, or I know enough to to know where to go to get um the answers that I need. That's one of the reasons I immediately hired a benefits expert for my team because I I just loathe them. But I do know enough, and I know enough about all the other facets of HR. My business partners, my generalists, they know enough about all of the facets of HR. Are they experts in all of them? No way. It's it's just not possible. But unfortunately, in small environments, we are expected to be everything to everyone. And I know that sounds crazy, especially if you are not an HR person by trade. If you are a marketing person, a finance person, and you were just given HR, how on earth can you know um a little bit about all of the disciplines of HR? And I hear you, that is a it is a steep learning curve. And I'm so thankful that there are resources available, local chambers, us, of course, um we would love to be a great resource for you in just learning enough that you are able to put in the right infrastructure. Certainly on the compliance side of things, you you have to know um you don't have to have every law memorized, but you definitely need to know where to go to get law updates, get legal updates, and know when things change that are going to affect your business. And to know how to look up just the right laws that affect your business in the first place. And so um I do believe that in a small environment, good HR is a generalist overall. Kind of along those same lines, I think the next characteristic of good HR is that you can bounce from a compliance mind to a strategic mind um and back and forth. I think you are expected to, and I think that while it does uh you know we we often joke inside the business, we have to like turn off this part of our brain and turn on another part of our brain when we're we're shifting like that. Um I do think it is a skill that you have to learn. And so when you have an HR leader inside your business, or if you are the HR leader inside of a small employer, being able to switch from being very tactical in any given moment to being more strategic when the need arises is really important. Um If you are a business leader inside an organization and you have an HR department of one, or you your person managing HR can do that, they can really kind of go from processing payroll one minute to talking to you about this new goal that you have or this new idea you have and how maybe they can put something in place that helps execute that from a people standpoint. You have gold there. You have a golden HR practitioner who really uh can flip uh from one to the other. It's not easy, and it's certainly there's not always the time to do that. Sometimes there's so much tactical stuff in a day that it's hard to be able to even give space to think about the strategic side of it. Um But when the opportunity arises, good HR is really able to kind of bounce between the HR strategy, the HR infrastructure, and the HR compliance, all in any given day. Finally, good human resources inside a small employer has to be able to do a lot with a little. They uh again have no budget. They have no resources or very limited budget, and resources they um might be doing it all alone. And so somebody who is um a great problem solver, somebody who can be scrappy in their mentality around how they get things done, someone who is not going to allow the limitations that they have to stop them from doing things that they know are right for the organization and the employees inside of it, um is crucial for small employers. And oftentimes we will have um clients come to us and they want to do a project. They want to do you know put in some new infrastructure, some new strategy, and we'll say, okay, do we have a budget for this? And if they say no, or they say you've got a limited budget, you know then we have to come back and be very creative in how are we going to execute this. And I think a lot of times you'll you get blocks in in either leaders or HR practitioners who say, well, I don't I can't I can't do anything because I don't have a budget or I don't have this. Um But inside of a small environment, if that's the mentality, you're never going to do anything because you may never have the budget or the resources to do the things that you want to do. And so you definitely want to be able to uh be a big problem solver, be really, really creative and scrappy in the in the things that you're trying to put in place. And and focusing on engagement and retention. So again, in a small employer, one toxic employee or one employee who leaves suddenly can really just wreak havoc on the entire environment. And so from a human resource standpoint, while I would argue that engagement and culture and employee experience is important in all sizes orgs, it can be detrimental in a small space. And so if you don't have somebody who can be really creative in how we put in engagement programs, how we build uh infrastructure that really helps improve the employee experience, helps make the employee experience a positive one, then you're just going to keep on spending your wheels um as you are trying to grow a business. And so having that kind of scrappy mentality around lack of budget and lack of resources certainly is a challenge, but it's not a complete stop roadblock where you can't do anything. The thing about good human resources inside a small employer is that you want to make sure it's in place before you need it. Um In the sales process, I often get uh leaders come to me and they need HR because something has happened. They have had some really high turnover, or they've got some really toxic employee situations going on, or they realize that there's no consistency and fairness and everything is just like the wild, wild west. Or they've been sued. They've had some kind of lawsuit happen either a wage and hour or a harassment. Something has happened to them. That has made them realize that maybe they need HR in place and maybe they need some support there. And so inside of small employers, I always say you need HR from day one. You need it from the first your first employee. If it's just you as a solo entrepreneur, probably not. But the minute you have an employee, there's some level of human resources that you need. And certainly as you grow, that level gets stronger. And so having someone who is managing your human resources who meets all of this criteria, who you are seeing and utilizing as a good business partner, and if you are that HR person that you are acting as and trying to make sure that your leaders see you as a good business partner, having people's strategy and infrastructure that helps and is aligned with business goals, having that personalization, that scrappy mentality, and that generalist ability to kind of navigate and jump between uh all of the disciplines of HR and also between compliance and um strategy when needed, making sure that you are putting that in place, having somebody who is managing in that way is only going to ensure that as you grow, as you scale, your people processes, which if broken can be rail your entire small org, uh are are in place and they're growing with you and they're doing the things that they need to do to really push your business forward. I said at the beginning of this episode that uh I look at the three components of HR: strategy, infrastructure, and compliance. That strategy informs infrastructure, infrastructure builds on compliance. I think that the base of that, of course, the core of that is uh compliance. And it is really important, as you are thinking about good HR, if you are thinking about all of the things that I said today, all of the things that uh need to happen to have good human resources inside of a small employer, you might be saying, I have no time for that. I have no time for that because I'm stuck in compliance all day long, or I'm stuck in um administrative stuff. We want to help you get out of that. We want to help you have really good compliance in place um so that you know that the the processes around your legal aspects of your business are just kind of like a well-oiled machine. They're there um they are updated and they are ready to go. And so we have an HR audit checklist, which is linked for you to be able to download go through. If you have not done an HR audit in your business, if you're a leader, not an HR person, and you haven't done an audit in your business, I would highly encourage you to do that. If you are an HR practitioner, um who is managing HR in a small environment, maybe you have done an audit. If you haven't done it in a while, you might want to. You may still want to download this because maybe there are some things on there that you weren't thinking about. The audit checklist does cover all of the compliance legal aspects of managing uh having employees, but also more strategic, more infrastructure-based. So in there, it's asking about workflows for different aspects of human resources, or an overall business strategy alignment. So it's a it's a pretty comprehensive checklist that I think could be really, really helpful if you're trying to just get out of that kind of rut of always being in this compliance place. Going through the checklist, making sure you have those aspects in place, kind of on autopilot, is going to help you get to that place where you can think more about the infrastructure and the strategy piece. If you are in a small employer, if you are managing HR, or maybe you're a business leader CEO who has a small employer, and you want more resources, more support, more tips, more tricks that are dedicated to you and you alone in that one to 500 range, then I hope that you will subscribe and come back for future episodes.