Small Businesses Have Undervalued HR Functions
A new industry survey revealed that many companies lack dedicated staff to handle essential human resources tasks.
Updated on Oct. 7, 2026 in Employment
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Recent findings show that 39% of small businesses operate without a dedicated human resources department. Instead, many firms rely on owners or non-specialized employees to manage these complex workforce responsibilities.
Why it matters
The delegation of HR tasks to staff without specific expertise can lead to compliance risks and inefficient management of employee needs. As businesses scale, the absence of a professional HR framework may hinder organizational growth and workforce stability.
A survey of 1,000 small business participants found that 15% of owners handle HR duties personally, 14% share them informally, and 10% delegate the work to office managers. These figures contrast with firms that maintain a dedicated HR function.
The players
FrankCrum
FrankCrum is a professional employer organization that conducted the survey of small business owners and employees regarding their human resources operations.
The details
Many small businesses redistribute essential personnel management functions to existing staff members who lack specialized training. These HR duties are frequently split among business owners, office managers, or distributed across informal teams.
Timeline
The report containing these survey findings was published on October 7, 2026.
Macro View
This trend mirrors historical economic cycles where small enterprises prioritize immediate operational costs over administrative infrastructure. Small firms consistently struggle to align their internal management with the professional standards seen in larger, established corporations.
Employees at small companies may find that HR issues are handled by staff without formal expertise, which can complicate payroll, benefits, or workplace disputes. For owners, relying on informal HR structures increases the risk of management bottlenecks that directly impact daily operations.
The takeaway
Small business owners should assess whether their current HR delegation strategy is sustainable or if it threatens future productivity. Implementing formal processes or seeking external guidance can prevent administrative gaps as a business grows.
Further reading
Learn more about organizational trends in the Employment section.
Source note: This article includes information reported by Human Resources Director.
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