Small businesses are increasingly assigning human resources responsibilities to employees whose primary roles lie elsewhere, raising concerns about workload, employee support and the handling of sensitive workplace matters.
A study by US-based HR services provider FrankCrum surveyed 1,000 small business owners and employees who handle HR responsibilities. It found that around four in ten small businesses operate without a dedicated HR department or employee, leaving HR work to owners, office managers or staff sharing the responsibilities informally.
Among respondents involved in HR decisions, just 13% held an HR-specific job title, while 29% worked as administrative assistants, coordinators or specialists without management titles.
The findings highlight the challenges that can arise when HR responsibilities are assigned without clearly defined roles, appropriate training or dedicated resources.
When Employees Become Accidental HR Managers
HR duties often begin as temporary assignments or informal favours before becoming a regular part of an employee’s workload.
In the FrankCrum survey, 18% of respondents handling HR said the responsibilities were added informally without a change in their role, while 14% said the work developed gradually over time.
The additional duties can also consume significant time. Some 43% of respondents responsible for HR reported spending at least 10 hours a week on these tasks. Meanwhile, 59% said the time they spent on HR had increased over the previous two years.
Compensation has not always kept pace. Only 34% reported receiving a pay increase when HR duties were added, while 42% took on the responsibilities without additional compensation.
For employees already managing their core jobs, the combination can create pressure, particularly when they must address complex employee relations issues without formal HR training.
Limited Training Can Create Workplace Risks
HR responsibilities extend beyond recruitment and paperwork. They can involve disciplinary action, employee complaints, termination decisions, workplace policies and compliance with employment laws.
The study found that 72% of respondents responsible for HR had felt unqualified or unprepared for at least one high-stakes HR situation. Common concerns included employee disputes, harassment complaints and discrimination claims.
Respondents also reported practical consequences associated with uncertainty around HR decisions. These included delayed terminations, delayed disciplinary action and employee issues remaining unresolved.
For small businesses, unclear responsibility and insufficient expertise can make it harder to respond consistently to workplace concerns and maintain accurate employment records.
The survey also found that business leaders were concerned about employee retention, employee lawsuits and wrongful termination claims, alongside compliance and documentation issues.
AI Is Being Used for HR Tasks, but Oversight Matters
Small businesses are also turning to artificial intelligence to help manage HR work.
Half of the survey respondents said their businesses had used AI for HR-related tasks during the previous year. Common uses included researching HR questions, preparing onboarding materials, drafting employee handbook content and creating workplace policies.
Around one-quarter reported using AI to generate guidance for disciplinary actions or terminations.
These tools can help teams prepare initial drafts and organise information, but sensitive HR decisions require careful review. AI-generated content may contain inaccurate information or fail to reflect the employment laws and circumstances relevant to a particular workplace.
For small businesses without dedicated HR staff, establishing a clear review process is especially important before using AI-generated material in employee policies or decisions.
How Small Businesses Can Strengthen HR Practices
The findings point to several practical steps for business owners and managers:
- Assign clear responsibility: Identify who manages employee records, recruitment, disciplinary procedures and termination decisions.
- Provide appropriate training: Employees taking on HR duties need guidance on handling complaints, documentation and sensitive employee matters.
- Set escalation procedures: Establish when to seek advice from an experienced HR professional or employment lawyer.
- Review workloads and compensation: Consider whether additional HR responsibilities require a change in job scope, working hours or pay.
- Introduce AI review procedures: Require qualified human review of AI-generated policies and guidance before they are used.
- Keep records organised: Maintain consistent processes for employee documentation, workplace policies and important employment decisions.
Small businesses may not need a large HR department, but they do need clear ownership of HR responsibilities and access to suitable expertise when complex situations arise.
Making HR a Defined Business Responsibility
The FrankCrum findings suggest that HR work is often being carried out even when no dedicated HR function exists. The challenge is ensuring that the people responsible have the time, training and support needed to do the work properly.
For small business leaders, treating HR as a defined responsibility rather than an informal addition to someone’s job can help improve employee support, strengthen internal processes and reduce avoidable risks.
