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Which Hat is it Today? ADP Study Finds 1.5 Million U.S. Small Businesses Spend Billions to Manage HR as an 'Ad-Hoc' Function, Increasing Business Risk
Research Reveals that Almost 75 Percent of Ad-hoc Human Resources Managers are Concerned About Accurately and Consistently Adhering to HR Compliance Regulations
The study indicates that as many as 70 percent of small businesses in
Based on this time spent and the average wage of a small business employee, the study calculates that these small businesses are essentially paying
Ad-hoc HR managers, or aHRMs as the study calls them, are small business owners, business leaders, office managers, accountants and finance staff who take on the HR role because there is no trained staff to do it. According to the study, this group says they don't enjoy having HR responsibilities added to their work duties, and would prefer to give them up.
"Managing the HR function traditionally has been challenging for small businesses," said
"We understand these challenges very well," Michaud continued. "But handling employees' crucial HR information, compliance activities, and benefits enrollment is no place to skimp. Small businesses may benefit from access to a dedicated small-business HR support team that can help them implement rock-solid HR best practices and navigate the effect of changing regulations on their businesses."
ADP embarked on the research to explore who in small businesses handles HR and human capital management tasks and responsibilities; how small businesses delegate the work for this function; what impact that choice has on small businesses' operations, and to gather a glimpse into the opportunity cost of this phenomenon.
The company surveyed a nationally representative sample of
Many aHRMs, it found, are concerned about the risk inherent in non-trained staff managing HR; that their lack of training could put their companies at risk. The top areas of concern are talent management, compliance, HR policy enforcement, and employee safety. Only one in five aHRMs is fully confident in his or her ability to manage HR tasks without making a mistake. And four out of five are concerned about their ability to keep up with future changes in HR regulations.
Other findings from the study revealed that:
- Almost 75 percent of aHRMs are concerned about accurately and consistently adhering to HR compliance regulations.
- 82 percent of aHRMs have no formal HR education or certification.
- Half of aHRMs are not certain that the employees of the business know where to turn with HR questions, and two-thirds have some concerns about employees getting the correct benefits information necessary to protect them and/or their loved ones.
- Half of aHRMs handle the HR tasks manually using paper or spreadsheets, and fewer than one in four fully agree they have the tools to do the job properly.
- The number one thing aHRMs feel would help them manage their HR tasks is to partner with an HR expert.
"These findings tell us that we have a tremendous opportunity to help small businesses possibly avoid costly HR mistakes and potentially save precious time and money by making our HR expertise available to them," Michaud said. "We've found that when we do what we do best, we can help companies do what they do best as they manage their businesses, and workforces, for growth."
An action paper and infographic featuring results from the ADP Ad-hoc Human Resource Management Study can be found on the ADP website.
About ADP (NASDAQ: ADP)
Powerful technology plus a human touch. Companies of all types and sizes around the world rely on ADP cloud software and expert insights to help unlock the potential of their people. HR. Talent. Benefits. Payroll. Compliance. Working together to build a better workforce. For more information, visit ADP.com.
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