Do you need a full-time HR person at 20 employees?
Updated: Sep 1
Usually, no. A business with around 20 employees does not automatically need a full-time HR manager just because it reached a certain headcount.
What it does need is a reliable way to handle hiring, employee questions, policies, documentation, manager support and the occasional employee issue that is not so straightforward. The right level of support depends on how quickly the business is growing, how much time people issues are taking and how complicated the workplace has become.
What 20 employees usually means for your business
At 20 employees, the issue usually is not the number itself. It is that the informal ways of managing people that worked with a smaller team are starting to get harder to maintain.
You may notice that:
Employee questions keep coming back to you or the same manager.
Different managers are handling similar situations differently.
Hiring and onboarding are happening often enough that you need a repeatable process.
Policies that used to live in someone's head now need to be written down.
Performance or employee issues are taking more time and becoming harder to navigate.
You are spending more of your own time managing people problems instead of running the business.
You do not necessarily need to build an HR department. You do need enough structure that the business is not dependent on you remembering how every situation was handled last time.
Signs Your Business May Need More HR Support
There isn't one employee number when a business suddenly needs HR. A lot depends on your managers, your workforce, how quickly you're growing, and the kinds of employee situations you're dealing with.
But there are some signs that your current approach may be getting harder to maintain.
HR has become someone's second job
It's common for HR responsibilities to land with the owner, an office manager, or someone in operations.
That can work for a long time. The challenge comes when HR starts competing with the job that person was actually hired to do.
Employee and manager questions keep coming back to you
Managers may be great at what they do and still need help with performance concerns, attendance issues, difficult conversations, documentation, or other people situations.
If those questions routinely make their way back to the owner, your business may need another level of support.
Your processes aren't as consistent as they used to be
When a company is small, it's easier to handle things informally.
As the team grows, inconsistencies become more noticeable. One manager handles something one way while another handles it differently. New employees don't always get the same onboarding. Important conversations may or may not get documented.
A little more structure can make managing the team much easier.
You're not sure what you might be missing
Policies, documentation, hiring practices, employee files, wage and hour requirements, leave questions and other HR responsibilities can become more complicated as a business grows.
You don't need to become an HR expert yourself. But you do need a reasonable way to make sure the important things are being handled.
When Does Hiring an HR Manager Make Sense?
A full-time HR employee can be a great investment when there is enough ongoing HR work to justify having someone dedicated to it.
That might include recruiting, onboarding, employee relations, manager support, benefits administration, compliance, performance management, training, documentation, and maintaining HR systems.
But employee count alone doesn't tell you whether you've reached that point.
A business with 25 employees, several managers, multiple locations, or frequent employee issues may have more complex HR needs than a larger business with a relatively simple workforce.
A full-time HR hire starts to make more sense when several of these are true:
You are hiring frequently enough that recruiting and onboarding have become an ongoing workload.
Managers need regular coaching and support with employee situations.
Employee issues are occurring often enough to require daily attention.
You have multiple locations, states or a more complex workforce.
Someone is spending a significant part of each week handling people-related work.
The business has enough ongoing HR work to justify a dedicated position, rather than occasional expertise.
The question isn't simply:
“How many employees do we have?”
It's also:
“How much HR work do we actually have, and what level of expertise does it require?”
What If You're Not Ready for a Full-Time HR Manager?
Hiring an employee isn't your only option.
Depending on what's happening in your business, you may be able to keep some responsibilities in-house while getting additional support where you need it.
Your existing team
An office manager, operations person, or another trusted employee may be perfectly capable of handling routine HR administration.
They may simply need someone experienced to turn to when a situation becomes more complicated.
HR software
Software can make employee records, onboarding workflows, time tracking, payroll integrations, and other administrative processes much easier to manage.
What it generally can't do is sit down with you and help think through a difficult employee situation or decide what makes sense for your particular business.
A PEO
A Professional Employer Organization, or PEO, can be worth considering if you're looking for payroll, benefits, HR administration, and other employer services bundled together.
For some businesses, that's exactly the right model.
Outside HR support
Outside HR support can make sense when you need experienced HR guidance but don't have enough ongoing work to justify a full-time senior HR employee.
That might mean getting help with a specific project, strengthening your HR foundation, supporting managers, working through employee issues, or having someone you can call when something comes up.
Option | Usually works best when |
Full-time HR | You have enough daily people-related work to keep someone consistently busy and need an internal resource. |
Outside HR support | You need experienced help building or fixing systems, handling employee issues, or advising managers without adding a full-time position. |
PEO | You primarily want payroll, benefits and certain HR administrative services bundled together. |
HR software | Your processes are already clear and you mainly need a better way to organize, automate or track them. |
Software can make a good process easier to manage, but it cannot make judgment calls for you when an employee situation gets complicated.
Employee count can change your compliance obligations
Headcount matters for another reason: some federal employment laws begin applying as a business grows. For example, Title VII, the ADA and GINA generally cover private employers with 15 or more employees, while the ADEA generally covers employers with 20 or more employees. Federal COBRA generally applies to private-sector group health plans maintained by employers with at least 20 employees, based on the prior year's employee count.
At 50 employees, additional requirements can come into play. For example, the FMLA generally covers private employers with 50 or more employees for 20 or more workweeks in the current or previous calendar year. Employee eligibility has additional requirements, including the 50-employees-within-75-miles test.
State and local requirements may apply at lower employee counts, so headcount should be treated as a trigger to review what applies to your particular business, not as the only factor.
Don't Start With the Job Title
It's easy to reach the point where HR feels overwhelming and think:
“We need to hire an HR person.”
Maybe you do.
But before creating the position, take a closer look at what's actually happening.
What is taking up your time?
Where are your managers getting stuck?
What isn't being handled consistently?
What work is primarily administrative?
Where do you need experienced judgment?
What needs attention now, and what can wait?
Those answers can tell you much more than employee count alone.
You may discover that you need a full-time HR manager.
You may discover that your existing team is doing just fine but needs better systems.
Or you may find that you need experienced HR support without adding another full-time employee.
The goal isn't to add more HR than your business needs. It's to put the right amount of support around the team you have.
FAQ's:
Can an office manager handle HR for 20 employees?
An office manager can often handle routine administrative work, especially when the processes are already established. The challenge comes when the work involves judgment, risk or employee relations.
Investigations, accommodations, terminations, classification questions and more complicated performance issues are very different from processing paperwork. A small business can absolutely split the work, with an office manager handling routine administration and an experienced HR resource stepping in when specialized help is needed.
When should a 20-person company hire a full-time HR person?
When there is enough ongoing HR work to justify a full-time role. Twenty employees alone is not the deciding factor.
Look at hiring volume, manager needs, employee issues, locations, growth plans and how much leadership time is being pulled into people problems. If the need is periodic rather than daily, outside support may make more sense than adding another full-time employee.
Not Sure What Kind of HR Support Makes Sense?
If you're trying to decide between handling HR internally, using software, working with a PEO, bringing in outside support, or eventually hiring an HR employee, I've put together a broader guide to help you think through those options.
Or, if you'd rather talk through what's happening in your business:
