HR for Small Employers: What Structure is Right Based on Employee Population

Throughout my HR career, I’ve worked with organizations of all shapes and sizes, from big-box retailers and privately owned shops to smaller family businesses. As an HR consultant I’ve partnered with start ups and small employers spanning all kinds of industries. 

If there is one thing I’ve learned about team structure in the HR space, it’s that there is no one-size-fits all approach to structuring HR. When I worked on a large HR team, leadership would assess headcount every 6 months. The company was in growth mode, and they understood the importance of maintaining a well-resourced  HR team to preserve the organization’s culture during this period of fast growth. 

But when I transitioned into start up work, the dynamics were completely different. HR was still essential, but other departments took priority for additional resources. Our small HR team simply did not have the budget or the capacity to hire more in-house help to meet demand, so we turned to outsourced support. 

Structuring HR for a small business is a lot like staffing a retail store. Back when I managed and staffed retail operations, the right setup was determined by two things: the volume of products and revenue.

Similarly, in HR, your structure depends largely on your employee population and the unique needs of your business. Finding the right balance between in-house support and outsourced solutions is key to ensuring your HR function is effective without overextending or going without certain resources. 

For solo HR pros or small HR teams supporting any size organization, it’s critical to know when to lean on fractional support and when it’s time to build in-house capacity. To help explain this, let’s break it down by employee population. 

If your organization has fewer than 75 employees, the good news is that you don’t necessarily need a full-scale, in-house HR department. Many small employers thrive with a combination of administratively focused in-house support and fractional HR services.

At this size, HR needs are often transactional: payroll, benefits administration, compliance, and maybe the occasional employee relations issue. These tasks don’t always require a full-time HR professional.

That’s where fractional support comes in. With fractional HR, you get access to experienced HR professionals who can handle everything from policy development to compliance audits without the overhead of a full-time hire.

I’ve worked with several businesses under 75 employees, and it’s amazing how much we can accomplish remotely or with occasional onsite visits. Whether it’s creating an employee handbook, setting up benefits, or addressing a tricky employee situation, fractional support provides the expertise you need without overburdening your budget.

That said, having someone in-house to manage day-to-day HR tasks can make a big difference.

This person doesn’t have to be a seasoned HR professional; an office manager or administrative assistant with basic HR training can handle onboarding paperwork, coordinate interviews, and maintain employee files.

Pairing this role with fractional support ensures all your bases are covered, from compliance to culture.

Once you hit the 75-employee mark, your HR needs start to shift. At this size, you’re likely dealing with more complex employee relations issues, and those “three-alarm” situations can quickly take over someone’s day. This is the point where having dedicated, in-house HR leadership becomes a game-changer.

With 75 or more employees, you’ve reached a size where employee relations are no longer occasional hiccups—they’re ongoing challenges. Employees may need regular coaching, and managers often require guidance on everything from performance management to workplace conflicts.

Having someone in-house who can dedicate their full attention to these matters ensures faster resolution and a more cohesive employee experience.

But it’s not just about handling problems as they come up. At this stage, HR should also be aligning processes with your business strategy. Are your hiring practices setting you up for growth?

Is your performance management system driving employee engagement? These are the kinds of questions a dedicated HR leader can tackle, helping your organization move from reactive to proactive.

Even with in-house leadership, fractional support remains a valuable asset. Many organizations at this size use fractional services to focus on specialized areas like employee experience, leadership training, or compliance reviews. For example, a provider like C8 can step in to design a robust onboarding program or lead DEI initiatives, freeing up your in-house HR leader to focus on strategic priorities.

I’ve seen this combination work beautifully. The in-house leader handles the day-to-day and big-picture strategy, while fractional support fills in the gaps, providing expertise where needed without the cost of additional hires. It’s a partnership that can grow and flex as your organization evolves.

Let’s wrap this up. Why does structure matter? Choosing the right HR structure is not just about keeping the department functioning like a well oiled machine, it’s about creating a foundation for success.

When HR is aligned with the needs of the business, the entire organization benefits: employees feel supported and leaders make better decisions.

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