When you start a new job, the first person you come in contact with on your first day is typically someone from the human resources (HR) department, which typically handles everything from personal issues to employee records. With the amount of sensitive information HR stores about employees, such as private personal information, compensation details, filed complaints, and more, the data should be completely secure.
Unfortunately, that’s not always the case. As experts in data recovery services, we know that the smaller the company, the less advanced the company’s data security measures can be. For this reason, we were curious to know if employees trusted companies with smaller HR setups and, if not, what concerns were most common.
Asking about the risk of potential data breaches, leaked information, and beyond, we surveyed 1,005 Americans who work in small companies with less than 50 employees to discover what they think about their HR department. Since small companies' HR structure can be minimal and oftentimes nonexistent, read on to find out how employees feel about their effectiveness and reliability.
Key Findings
- Half of Americans say a lack of HR department contributes to a toxic workplace.
- Over half, 64% say their boss has a hand in HR operations, and 24% feel uncomfortable about it.
- Of those who work in small companies, 47% say their company's HR structure is unprofessional.
- In general, 43% don't feel like they can confide in their HR.
- Over a third of Americans don't trust their company's HR.
Why Employees Don’t Trust HR at Small Companies
Whether it’s the lack of a welcome kit, orientation, onboarding, or help with paperwork, it’s no secret that small companies often run very differently than larger companies with an expansive HR team. In fact, in most small companies, there may not be an HR team or person to begin with. Our survey revealed that 88% have worked for a small company with no dedicated HR person. While the lack of resources can seem like not a big deal, half of Americans say a lack of an HR department contributes to a toxic workplace.
In general, out of those who work in small companies, 43% of our respondents said they don’t feel like they can confide in their HR. Even more alarming is that over a third of Americans don't trust their company's HR. The top reasons for distrust are that they feel their HR shows bias, favoritism, and inconsistency.
Showing bias in any scenario, especially at work, can break trust as employees expect fair treatment. Whether it’s who lands the promotion, receives recognition, or other opportunities, the perception of favoritism can lead to a lack of trust since employees feel like certain individuals will always receive preferential treatment over others every time.
This lack of trust can leave employees concerned about who their data is being shared with since there are already unprofessional actions going on. If policies and decisions are not consistently applied, it can be hard to take HR seriously. In short, fostering a transparent and fair HR environment is crucial for building trust within organizations.
How HR at Small Companies Is Unprofessional
While not all small companies struggle with their HR operations, smaller companies, in general, tend to face unique challenges that can be perceived as unprofessional. In fact, nearly half of those who work in small companies say their company's HR structure is unprofessional. This can be due to smaller companies having limited resources and staffing constraints that make it difficult to maintain a comprehensive HR program.
According to our respondents, the top three things HR in small companies does that make them seem unprofessional are general disorganization, poor communication, and failure to address interpersonal conflicts.
Without a comprehensive HR program, it can be hard for employers to keep up with all things concerning their employees and also stay up to date with evolving employee laws and industry standards. This is especially true when the dedicated HR person has too much on their plate at the company. For example, 73% have worked at a company where the HR person also had another job entirely within the company.
Things can get even more slippery on the professional scale when the company leader, who is focused on all other business aspects, also manages HR operations, and this has been the case for seven in 10 workers. When HR duties aren’t prioritized, things can get loose when it comes to data protection which can open the door to data breaches and other compromising situations.
Besides staying up to date with employee records and ensuring proper documentation, HR is supposed to be the place to go when you are experiencing some workplace conflicts or concerns. It can be challenging to approach HR about negative situations when your boss is HR, which is something that is very normal in small organizations — 68% have worked at a company where their boss managed HR.
Even if your boss doesn’t handle all of HR entirely, it can still be unsettling to have them involved in any part of HR as 64% say their boss has a hand in HR operations and 24% feel uncomfortable about it.
Employees Top Privacy Concerns in Small Companies
Limited resources, less formalized policies, and small teams can make it challenging for employers to completely protect their employees' privacy. Whether it’s sensitive personal information or private information regarding their employment, small businesses often leave gaps for potential internal or external data breaches due to lack of resources.
An important practice in all businesses is making sure that everyone is aware of data privacy practices, as this can minimize the risk of data being compromised. Unfortunately, almost two-thirds of our respondents have never received training or information on data privacy practices at their company.
Data privacy concerns in small businesses are all too common. Our respondents revealed that the top area they’re concerned about regarding privacy and confidentiality at their company has to do with information about conflicts or interpersonal issues. This goes back to employees at small companies experiencing distrust and viewing their HR as unprofessional, which may cause them to worry about how their issues get passed on. The next two areas where employees are concerned about their privacy and confidentiality are compensation and feedback or complaints about supervisors.
A common practice within small businesses is to outsource their HR needs, like employee documentation and payroll. This means an outside organization or person comes across employees' private details such as name, address, birthday, social security number, bank account information, and more. This practice can be unsettling as over half of the employees surveyed say they would be concerned to know a third party or freelancer had access to their sensitive information.
With smaller companies often operating with an all-hands-on-deck approach, sensitive information can often land in the hands of people it probably shouldn’t. Our respondents revealed that 23% have been surprised about who can access their sensitive information. Sometimes, that information is shared with people who had no business knowing, and 26% say sensitive information about another employee has been shared with them that shouldn’t have been shared.
How Small HR Departments Can Improve
For any business, taking the time to enhance HR practices is crucial for fostering a positive workplace environment. While HR can be a controversial department for employees, the lack of a department can paint a negative picture. Almost three in 10 say a lack of HR department means the company doesn't care about employees. Even more alarming is that the lack of HR can lead to unfair workplace practices, as almost three in 10 have witnessed upper management take advantage of non-existent HR.
The truth is employees need and want someone who is dedicated to all things people and culture. Nearly half wish their company had a more structured HR department, but many companies lack in simple areas. For example, 48% of small companies don't have an employee handbook. The top HR areas that employees feel their small company lacks are training and development, employee communication, and compensation and benefits.
While HR may not personally train employees, they are in charge of collaborating with department heads to identify training needs and source tailored programs. In terms of communication, regular feedback and communication between employees and HR can encourage dialogue and help workers feel heard and cared for.
When it comes to compensation and benefits, HR helps by conducting regular market analyses to ensure the employees' salaries remain competitive. When employers don’t align salaries and benefits with industry standards, the company risks losing its top talent. By prioritizing these areas, HR in small departments can contribute significantly to employee satisfaction, personal development, and overall organizational success.
The Benefits of Working at a Small Company
Although working at a small company with limited HR sounds like a nightmare for some, others actually prefer it. In fact, Americans are split on which is better. Half say they prefer a small company’s HR with limited resources and presence, and the other half prefers a big company’s HR operation.
Many employees actively look for positions at smaller companies because they prefer the culture of the organization. The top three reasons employees who work at small companies stay at their companies are flexibility, job satisfaction, and work-life balance.
It’s no secret that smaller companies often have a more flexible and relaxed culture that allows employees to maintain a better work-life balance and results in job satisfaction. While every company you work for has its pros and cons, it’s up to you to decide what you find most important and work for a company that can offer you that.
Protect and Recover Employee Data With Secure Data Recovery
A small-scale HR department doesn’t have to be a bad thing for employees, it just requires proper planning and vigilance from employers. The same can be said for the data of the company and its team members. Taking the proper steps to ensure there are no gaps in security can prevent future scenarios involving compromised or lost data.
If you have any data security questions or find yourself in need of data recovery services, our experts can help. Whether it’s for hard drive recovery or data loss scenarios, or you need enterprise solutions like RAID recovery, give us a call to learn more. With decades of experience resolving the most common and complex data loss scenarios, your device will be in good hands.
Methodology
In January 2024, we surveyed 1,005 Americans who work for small companies with less than 50 employees about their HR department. Respondents ranged in age from 18 to 76 years old and were 49% female, 50% male, and 1% nonbinary.
