Better Business for Small Business Leaders

When to Hire HR? Julie Wheeler Shares a Better Option for Growing Businesses

• Chrissy Myers • Season 1 • Episode 25

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Reaching that 15-30 employee threshold brings a crucial decision for business owners: is it time to hire a dedicated HR person? Before taking that leap, Julie Wheeler of Clarity HR makes a compelling case for considering fractional HR services as a strategic alternative that could save your business money while providing superior expertise.

When businesses cross this growth threshold, they typically face one of two scenarios: either they've experienced a negative event highlighting their compliance gaps, or their office manager has become overwhelmed as simple HR tasks evolve into complex responsibilities requiring specialized knowledge. The misconception that employment regulations only matter once you reach 50 employees leaves many small businesses vulnerable to costly mistakes.

Wheeler explains that fractional HR offers distinct advantages over hiring a single full-time generalist. Rather than paying for 40 hours weekly of limited expertise, fractional services provide access to a collaborative team of specialists with diverse industry knowledge and regulatory expertise. This approach delivers high-level guidance that might otherwise be unaffordable, especially considering the rising salaries commanded by experienced HR professionals.

Perhaps most valuable is the unfiltered perspective fractional HR professionals provide. Unlike employees who might hesitate to challenge the owner's perspectives, external consultants can directly address problematic practices without fear of repercussions. "An employee doesn't always have that leverage to say 'you hired me as an expert, why aren't you taking my advice?'" Wheeler notes. "We're going to give them our best advice to protect them and their organization, regardless of whether they're going to be happy with that answer."

For business owners wondering if they need HR support, Wheeler offers a simple litmus test: listen to your employees. When staff members begin questioning policies, seeking clarification on procedures, or documenting issues independently, these are strong indicators your HR infrastructure needs attention. These challenges are common in growing businesses, and addressing them proactively creates an environment where expectations are clear and the organization is protected from compliance risks.

Ready to explore if fractional HR is right for your business? Schedule a discovery call with Clarity HR today and take the first step toward comprehensive HR support tailored to your organization's unique needs.

🎙️ Connect with Chrissy Myers and discover how resilience, expertise, and community can transform your world:

🔗 Follow Chrissy on LinkedIn for behind-the-scenes insights, leadership tips, and updates on her journey as the CEO of two thriving businesses.

📘 Grab your copy of 'Reluctantly Resilient' to learn how Chrissy turned challenges into opportunities and how you can do the same in your life and business.

🤝 Explore Clarity HR and discover how Chrissy’s team simplifies HR for small businesses, giving you peace of mind to focus on what matters most.

💼 Visit AUI to see how Chrissy's employee benefits expertise can help you build a healthier, happier workforce.

Speaker 1:

An employee doesn't always have that kind of leverage to say you hired me as an expert, why aren't you taking my advice? They may be thinking that, but they're not necessarily going to say that, right, so there are times that I have said that to a client. You're paying me to give you my best advice and you're fighting with me and that's not helping you. If what I'm recommending isn't going to work for you, let's talk about what will.

Speaker 2:

When you cross that 15 to 30 employee mark and you're starting to think, wow, I need to do something with HR and my people and I probably should hire an HR person. I want you to stop for a minute, because we're going to talk to Julie Wheeler today from Clarity HR about why fractional HR services could benefit you. Julie, thank you for joining the podcast today. Thank you for inviting me, chrissy. All right, so let's talk a little bit.

Speaker 2:

When a business owner comes to you and says I think I need someone in HR. I have 20 employees.

Speaker 1:

I think I need an HR person. What's usually going on behind?

Speaker 2:

the scenes and you're smiling already. Well, usually they're not that enthusiastic when they say that.

Speaker 1:

I'm so excited. Compliance there's one or two things happening. Either there's been a huge event, negative event that impacts them and they think, oh my gosh, I need somebody keeping an eye on this for me, or either they or an office manager has been handling HR tasks and is becoming overwhelmed because it's turning into more than just tasks. So it's okay to put out an offer letter, it's okay to onboard a new employee or enroll them in benefits, but when questions start coming up policies you know, what's your vacation policy? Will I get paid out when I terminate? All these things all of a sudden new employees may ask and you don't have the answers, and it kind of is a stark reality that maybe you need to start having the answers as you grow.

Speaker 2:

Tell me more about some of those tasks that tend to sneak up on owners and office managers once they cross that 15 to 20 line. You said you know policies, procedures, but what are some of those other sneaky tasks on the compliance side where they're like I had no idea?

Speaker 1:

Usually the big one is wage and hour law, which is impactful immediately. Really, when you have a business, it hits you. I think it's two employees, maybe one or two employees, but we don't think about it. Maybe we have family members and we're not concerned. Maybe we brought in friends to help us and they're just taking 500 bucks a week and they're happy and it's all good.

Speaker 1:

But when you start building more of a workforce, people start asking questions about things like overtime or comp time or vacation time, and you don't maybe you don't have the answers. That is a huge, huge red flag. Things, other things that can come up oh my gosh, this person's not performing, how do I handle that? And you have a conversation but you don't document it, and now that can turn into a huge problem if you don't have the proper documentation. So there are a lot of things Unemployment claims COBRA will kick in at 20. So there are a lot of different employment laws that do kick in over time. People tend to think, well, until I have 50 employees, I don't have to worry about it, and that's just not true. So different timeframes, but definitely when you're hitting that 15 to 20 mark, you really need to pay attention.

Speaker 2:

Yeah, and oftentimes I think, as small businesses, when they have less than 10 employees, think the rules don't necessarily apply to me or it's not a big deal, and then, of course, that's not true. And then you made the comment about family and friends working. It's no problem. I feel like some of the things that we get called in on that are a little bit more complex, often deal with family and friends, so yeah, everything.

Speaker 1:

And my accounting manager at an organization I worked with used to say everything's great when you get married. It's when you get to the divorce that you have a problem. Yeah, so everything looks great when you're hiring somebody and you know it's going to be a great experience and oh my gosh, what a great relationship we have. And then things start to go sideways and you really need to have had your ducks in a row to be able to protect the organization.

Speaker 1:

And it's all about protecting the organization. You want to maintain that organization for all the other employees. You want to make sure that everybody continues to have a job, and one bad hire, one big mistake, can really put that at risk. So you really need to kind of balance that expense with what is our cost to make this mistake and what is our level of pain.

Speaker 2:

Yeah, Well, we talked about the HR pain point, so let's talk a little bit about fractional HR and why it may make more sense. So what are the benefits to going with a fractional HR company like Clarity, instead of hiring a full-time HR generalist?

Speaker 1:

Well, Clarity is a little bit unique, I will say, in how we approach a new client. We are very client-centric and we customize our services to the client. So where one client may need us to come in and maybe they're a startup organization or maybe they only have five employees at this particular moment but they're planning a growth spurt, but they haven't put their policies and procedures in place, we can come in and we can help them customize that handbook. We can help them set specific processes so that they know they're doing the same things time over time and build consistency in the organization. But then there are other organizations that maybe they're on fire right now, maybe they did have a big event, maybe they've just been served with a demand letter from an attorney representing a former employee and they don't know how to handle it. They don't know what to do, they don't know where to turn, so we'll put out the fires and then we go into more of an audit.

Speaker 1:

How are you handling this? What does your handbook look like? Do you have a process for onboarding? Do you have a process for performance management? And we go through the employee life cycle. So it really depends, but we provide the services that the client needs when they need them. So in a way, it's on demand. And then we're also proactive. But you're not paying somebody 40 hours a week or 2,080 hours a year. You're paying for the services that you need and the expertise you need. You're hiring a team, so our team has expertise in not only a variety of industries but also in a variety of compliance matters. So we have our manufacturing folks that are extremely intimately aware of OSHA and workers comp regulations.

Speaker 1:

I tend to be a more of an FLSA, which is wage and hour and employee relations, flsa, which is wage and hour and employee relations. So we deal with different things and, as opposed to hiring one person with that, whatever that limited knowledge, is that that one person may have you actually have a team of experts that can be pulled from to help your organization. And in addition to that, I just want to mention that HR people have become pretty expensive, and so what you may have available to pay, what you've decided you can afford to pay an HR person, may not bring to your organization the level of expertise that you actually need, and so it's not really always the difference in hiring fractional versus hiring a full-time person on your staff. You have to look at what your needs are and then does the salary that I have available to pay cover those needs or do I need to look at an alternative?

Speaker 2:

You make a really good point, too, about expertise. I'd like maybe for you to expand a little bit more on kind of the breadth of expertise that Clarity has. One thing that I really like and get to experience with the Clarity team is when there is a significant issue that an employer is facing. Oftentimes you're brainstorming and you're working together because the depth of experience that you have is different than the depth of experience as other members of our team and it seems to be at some point in time, someone has had some type of experience adjacent to, maybe, the issue that one of our organizations is dealing with.

Speaker 1:

That is absolutely true, and that's one of the things that I just love and cherish about our team. We are so collaborative, and when an issue comes in, the phone gets generally the comment made to the client is please let me consult with my team and I will get back to you as soon as possible. And then we just come together and talk about what is the issue? What have we seen in the past? What laws can impact the situation? What could the employer be facing? How can we mitigate liability? What can we recommend that will help them get through this in the easiest possible way? And then sometimes we even call the client back with the whole team on the phone and talk to them about what we've talked about and why we've come to the recommendation that we've come to, and if they are not comfortable with that, then we brainstorm more.

Speaker 1:

So we actually are a little bit unique in that respect too, because our HR people are all on site, which has caused some issues with our recruiting. But work from home is really not a regular thing for us because we are so collaborative, and it helps too if one of us wants to take a day off. Everybody's aware of what's happening with the client, so the client doesn't call in and oh, my person's not available so nobody can help me. That's not true. In our organization we have a weekly meeting and we go over every client and talk about what's going on with that client and if they have any pending issues. So we all stay aware of the clients and what's happening with them and we collaborate a great deal on issues and solutions and recommendations.

Speaker 2:

So we talked about collaboration. I want to go off to the side a little bit and talk about something that we had a conversation about I think it was yesterday in the role that fractional HR plays as it relates to the business owner and them not being an employee of the business. Can you talk to me about that value, why that's so valuable, especially?

Speaker 1:

to a small business. Well, some clients may say it's valuable and some clients may say it's not yes.

Speaker 1:

But really we're not beholden to that owner, we're not worried about keeping our job. Certainly we want to make the client happy. Certainly we want the business owner to be happy, but we are going to give them our best advice to protect them and their organization, regardless of whether or not they're going to be happy with that answer. And many times an employee is not going to be as comfortable doing that. So it really helps in many situations to get that third party outside the organization perspective on a situation that may be happening. That said, we do tend with most of our clients, unless they're really far away, we do tend to be on site on at least an intermittent basis so that we do get to know the employees and we have a pretty good feel for the culture and how the employees work together and what the dynamic is in the organization, which really helps us to provide sound advice to those business owners, regardless of the size of the organization there really helps us to provide sound advice to those business owners.

Speaker 1:

Regardless of the size of the organization, there are always dynamics going on with the employees. So we have a tendency to come in as a consultant. The business owner sees us as an expert consultant that they're paying to provide that opportunity opinion. And an employee doesn't always have that kind of leverage to say you hired me as an expert, why aren't you taking my advice? They may be thinking that, but they're not necessarily going to say that, right? So there are times that I have said that to a client you're paying me to give you my best advice and you're fighting with me and that's not helping you. If what I'm recommending isn't going to work for you, let's talk about what will, but there's no point in arguing with me about it. So it's just a little bit different relationship that can help that business owner more as a partnership as opposed to that employee-employer relationship. Nice.

Speaker 2:

Can you break down what working with Clarity kind of looks like? We talk about implementation and talk about ongoing services. Can you talk a little bit about what an engagement is?

Speaker 1:

Sure, usually you let us know we have a new client, I do. We reach out as quickly as possible, usually within a day, maybe two days max, and schedule a meeting. You kind of give us the high level viewpoint of why they're coming on board. So we know, are we walking into a disaster that we need to sort through or are we walking into a startup that just wants us to help them through? So we, you know we have a little bit of an idea going into that call. But we talk to that prospect or that new client and we start asking them and auditing what their situation is. And even in our proposal we say you have an obligation to let us know if you have anything, any hot button issues, anything you need us to address immediately. Otherwise we're going to start our process and our process is essentially an audit.

Speaker 1:

Do you have a handbook? If so, please send it to us. Do you have a process for onboarding? What payroll or HRIS system do you use? How do you utilize it? What modules are you subscribed to? Do you have your workers' comp policy up to date? Have you posted the certificate? We just kind of go through our whole litany of things and find out where that business is and that helps us get a perspective on where we need to start, how we need to help them and move them along. If there's something you know, one of the things we ask do you do an offer letter for a new hire? Do you have job descriptions in place? Do your new hires sign off on those job descriptions? Do you do background checks? Do you do drug testing? And if those are no's, we know where we have to immediately address.

Speaker 1:

Okay, this has to happen this has to happen and this has to happen. Do you have any pending unemployment claims? Do you have any pending workers' comp claims? Any OSHA issues?

Speaker 2:

Any.

Speaker 1:

OSHA issues. We took on a client that had a pending OSHA issue and found out that there was a lot more to that. But Clarity was able to step in right away and ended up. I believe we saved the client over 50% in fines and penalties from what they were being served with. So we can come into a hot situation and help you.

Speaker 1:

But eventually we are going to get to the base operations and say we have to make sure we're issuing offer letters, we have to make sure we have job descriptions. We really need to have an org chart so everybody understands their position in the organization and how it fits in. Interestingly, a lot of people want to get to performance management, a lot of small employers especially. We tend to do that last because it's going to be more complicated and take a little bit more time than putting together an onboarding process and an offboarding process. But it is a little more complicated and it gives us a little time to understand the company dynamic and that's important when you're putting together a performance process for the group. But we really do customize for the employer, so it's a little different every time.

Speaker 2:

Yeah, when I have conversations with clients or prospects, I usually say you know, we don't expect you to have everything figured out. If you did, why would you call us Exactly? And if you are calling us and you've got it all figured out, then you're probably not going to be coachable and I don't know is an okay or we don't?

Speaker 1:

have that. Oftentimes I feel like when I introduce them to the implementation process, there's a little bit of intimidation around. Oh well, we don't know where all of our stuff is. I'm like that's okay, we'd much prefer that you say we don't know than you make something up. Well, and I'd rather them say we haven't done this in the past and create something for them that's compliant and in the best practice mode than to have them give me a piece of paper that could get them in a tremendous amount of trouble and they've issued it to 20 employees. Yeah. So I always tell them it's okay, I don't, I'm fine. If you don't have this, or if you can't lay your hands on it, that's fine, you can always send it to me.

Speaker 2:

Yeah.

Speaker 1:

I just would like to this is my fact finding mission to try and figure out where you are so we can help you get to where you need to be. You wouldn't have called us if you didn't know that you may have some deficiencies in places. So that's what we're here to do. We're here to find those deficiencies and get you compliant and get your employees to a place where they know what to expect when they come into the office every day.

Speaker 2:

I want to go back to those organizations that are kind of thinking about, you know, I might need fractional HR. What are some of those warning signs or ahas for those businesses to kind of think that you know, maybe it's time for me to pick up the phone, call clarity, or maybe ask for some help because I might've waited too long.

Speaker 1:

Generally it's out of the mouths of the employee. Okay, it's in a conversation that you have with an employee, what are the things they're hearing from their employees.

Speaker 1:

Why don't I get comp time? Oh, okay, I want to go to the doctor. I don't understand why I can't work over. It's when an employee starts challenging you on your wage and hour laws, the wage and hour policies or maybe lack of policies that you have in place, it's very easy to diffuse that when you understand them, because the answer simply is you're a non-exempt employee, you're an hourly employee and we're not allowed to give you comp time week over week. We can only pay you overtime week over week. We cannot give you comp time. Only the government can do that. We can arm you with the answers to those questions as long as you're following the rules.

Speaker 1:

But when an employee starts challenging, we recently were on a call with a client and this is an existing client and we were talking about their wage and hour practices and they said we said we need, you need to put together some sort of time records for the last six months that you're void in time records.

Speaker 1:

And they said well, that shouldn't be too hard to do, because our employees have been tracking their time on an app on their phones. Oh, my jaw just dropped. You want to talk about a red flag flying high, that's, employees that are keeping track of their time and the employer has no access to those records. So they don't even know what the employees are tracking, oh dear. We kind of said whoa, stop, we have to deal with this right now. So that's a red flag Anytime that the employees are kind of documenting things that the employer's not. Anytime that an employee comes to you and says you know, well, I hurt myself last week here and now I need to go to the doctor and I need the time off and I shouldn't have to use my PTO. It's like why didn't you report your incident when it happened last week?

Speaker 1:

Well there's nothing that tells me I needed to. Oh dear, we don't have a handbook, we don't have a guideline for how to handle an accident, how to handle record keeping, how to handle these things, and these are things that have happened to us in the last couple of weeks, that we've heard from our clients, so this is not unusual. You don't need to feel in any way like you're the odd man out.

Speaker 2:

No, there's no embarrassment here. Oh no, Every business deals with it. No, no.

Speaker 1:

So we just need to get it fixed. That's all, and that's what Clarity is here to do. We're here to help you get to the place where an employee is not going to come to you and throw something at you that you're not prepared for.

Speaker 2:

Yeah, so if someone's listening.

Speaker 1:

they're still on the fence. They're not sure if they need help. Yet what would you encourage them to do next? I would encourage them to do two things. One, I would encourage them to talk to their employees. Right? Sometimes, you know, we say with children out of the mouths of babes, right? Well, listen to your employees. Are your employees satisfied? Are they happy? Do they feel comfortable? Do they know what's expected of them? Do they know what they're being held accountable for? That's number one, because if they don't, then you really need to start doing something to make everybody understand the expectations and how they're held accountable. It creates a good HR environment for the employees and HR is simply human resources, right? Employee engagement all of those things encompass HR.

Speaker 1:

The other thing is call us and talk to us. We'd be more than happy to. There have been times when we've said I'm not sure you need us. Yeah, we absolutely have said that we have. So it's not the normal call and you're going to be pressure sailed to sign up with Clarity. We don't do that. But give us a call. We'd be happy to walk you through and see where you're at with your processes your compliance, your number of employees and your awareness of what's required of you.

Speaker 2:

Hey, if you're in great shape, we're going to tell you that. Well, julie, we end every episode with the same question. So I'm going to ask it to you and what is the one thing that business leaders can do to get 1% better in their business today?

Speaker 1:

Start listening very closely to your employees. Your employees are going to give you all the clues that you need if something's wrong and they're going to tell you when things are right. But you have to listen and that can be a large employee meeting where you're sitting down and letting them take the floor. The biggest thing is empowering them to talk to you, or this can be one-on-one meetings. Take them off site for a cup of coffee. Ask them what's working for them and what's not working for them. We do that with our teams every quarter. But listen to your people. Just listen to your people, because they're going to tell you. You will know if you listen carefully.

Speaker 2:

Julie, thank you. Thank you for your time today and you can learn more about Clarity you. You will know if you listen carefully. Julie, thank you. Thank you for your time today and you can learn more about Clarity HR. You can book a discovery call. Everything will be in the show notes and in the meantime, we'll see you for our next episode. Thanks a lot. Thank you, Chrissy.