Five Myths About HR in Small Business

…And Why They Could Cost You

On this week’s episode of Built Without a Net, I take on some of the most common myths I hear about HR in small businesses. Too often, owners and executives think HR is something for “bigger companies” or that common sense is all they need. The truth? Every business—no matter the size—has HR the moment it hires its first employee.

Myth #1: “We’re too small to need HR.”

If you have even one employee, you have HR. Hiring triggers dozens of compliance requirements. Ignoring them doesn’t make them go away—it just increases the risk that a single complaint or audit could upend your business.

Myth #2: “HR is just a traffic cop that ties my hands.”

Bad HR may feel that way, but good HR brings consistency. And consistency looks like fairness. It helps you defend against discrimination claims and builds trust across your workforce.

Myth #3: “We’ve never had issues, so we don’t need HR.”

Past luck is not a future strategy. Many businesses call for help only after their first complaint or government notice. Proactive systems and documentation protect you before that moment arrives.

Myth #4: “Outsourcing HR means I lose control.”

Not true. Fractional or outsourced HR gives you expertise while you retain decision-making authority. It’s about leveraging specialized support, not handing over the keys.

Myth #5: “Our managers have common sense, so HR isn’t necessary.”

Common sense doesn’t equal compliance. Sometimes it even leads you astray—like the case where a Milwaukee employer terminated a worker with a past conviction, only to lose in court because the decision wasn’t legally defensible.

Red Flags That HR Might Need Attention

Beyond these myths, I also share warning signs that your HR function needs a closer look:

• Leaders spending more time on people problems than business growth.

• Recruiting struggles or rejected offers.

• High turnover.

• Outdated or nonexistent handbooks.

• Rising employee complaints.

• Managers unsure how to handle performance issues.

• “Gut feel” concerns about compliance, morale, or risk.

• Rapid growth crossing employee count thresholds that trigger new regulations.

If any of these sound familiar, it’s time to take a deeper look at your HR practices.

🎧 Listen to the full episode here: Apple Podcasts (also available on all major platforms).
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