3 Myths About HR That Could Be Hurting Your Small Business
You're wearing multiple hats as a small business owner - sales, marketing, finance, and yes, human resources. Without being an expert in areas outside of your product or service, you can inadvertently operate based on assumptions or outdated information. These dangerous untruths can expose your business to unnecessary risk and hold your business back, especially with employee lawsuits rising 400% over the last 20 years. This blog post debunks three common HR myths and sets the record straight.
Myth #1: "HR is only for big companies."
Small businesses owners often believe that HR is a luxury reserved for large corporations who can afford a full-time HR Manager. This couldn't be further from the truth. Over forty one percent of employee lawsuits are brought against companies with fewer than 100 employees!
The "we're like a family" approach might work when you have five employees, but it breaks down quickly as you scale. Without formal processes, you risk:
Inefficient hiring processes
Poor onboarding and training
Potential discrimination claims
Compliance violations
Wrongful termination lawsuits
Misaligned compensation and performance management strategies
Decreased employee satisfaction and employee morale
High turnover rates
The Reality: Without an HR strategy or expert guidance, these issues can quickly spiral out of control, leading to costly mistakes. HR isn't about size; it's about sustainability. You don’t need a full HR department, but having a dedicated HR consultant, like CPR, or simple systems in place can help your business grow while avoiding pitfalls like legal trouble or high turnover.
You don’t need a full HR department, but having a dedicated HR consultant, like CPR, or simple systems in place can help your business grow while avoiding pitfalls like legal trouble or high turnover.
Myth #2: "We can handle compliance on our own."
Employment laws are constantly changing, and keeping up can feel overwhelming for small business owners juggling many responsibilities. You might think you’ve got it covered, but one oversight—like misclassifying an employee or ignoring wage laws—can result in significant fines or lawsuits.
HR can be perceived as a bureaucratic necessity or something to check off the list. But effective HR is about so much more than filing forms and documenting unprofessional behavior. It's about:
Talent acquisition and retention strategy
Building a high-performance culture
Aligning human capital with business strategy
Driving employee engagement
Mitigating legal and financial risks
The Reality: Compliance is complex, and mistakes are costly. HR is a strategic business partner that drives organizational success. By treating HR as a mere administrative function, you're missing opportunities to leverage your people. Investing in HR - whether through a consultant, like CPR, or strategic tools - can save you significant money and headaches. Not investing in HR can cost you far more in the long run.
Myth #3: "We don’t need formal policies for such a small team."
It’s easy to assume that when everyone knows each other, formal policies aren’t necessary. After all, you can just "talk it out," right? Unfortunately, this informal approach often leads to inconsistent treatment, misunderstandings, and even legal risks.
For example, lacking a clear vacation policy might seem harmless until one employee feels unfairly treated compared to another. Or, without a written anti-harassment policy, you leave your business vulnerable if an issue arises.
The Reality: Even in a small business, formal policies provide clarity, consistency, and protection—for both you and your employees. They set expectations and create a fair, professional work environment.
The Bottom Line
Believing these myths can cost your business time, money, and valuable employees. By addressing these misconceptions, you can build a stronger, more resilient organization.
Not sure where to start? Contact CPR who can assess your current practices and help you implement tailored solutions. With the right approach, you can focus less on HR headaches and more on growing your business this year.
Disclaimer: The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Information on this website may not constitute the most up-to-date legal or other information.
