When HR Headaches Slow Down Growth (and What to Do About It)

In a recent Ask the CFO session, I invited my friend Rob Stepen from Insperity to join us for a conversation about something that rarely gets enough strategic attention in small and mid-sized businesses: HR.

Not the people side of HR. The operational, compliance-heavy, time-consuming side that quietly absorbs leadership attention and slows momentum.

What unfolded during that conversation was less about a specific service and more about a pattern I see over and over again in growing companies.

As businesses scale, HR doesn’t usually break all at once. It stretches. It bends. It gets patched together. And before anyone realizes it, it becomes one of the biggest unseen drags on growth.

The Hidden Cost of “Making It Work”

One of the stories Rob shared stuck with me because it was so familiar. A CFO was manually calculating PTO in Excel—by hand—for the entire company. It took hours every cycle. When Rob showed her a system that could do the same work in seconds, her reaction wasn’t excitement. It was disbelief.

That moment captures what’s really going on in many organizations.

Highly capable leaders—owners, CFOs, operations managers—are spending time on HR administration not because it’s strategic, but because someone has to do it. The cost isn’t just the hours themselves. It’s the opportunity cost of what those leaders are not doing: planning, selling, improving margins, or thinking ahead.

HR rarely shows up as a single large line item on the P&L. Instead, it shows up as friction—constant interruptions, mental load, and reactive decision-making.

What Most Businesses Actually Have (and Why It’s Risky)

Very few small or mid-sized companies have a true HR function. What they usually have is a collection of responsibilities spread across people who already have full-time jobs.

An office manager tracking benefits.
A controller Googling labor laws.
A founder writing policies based on something they found online.
A long-tenured employee handling “HR stuff” because they’re good with people.

None of that is inherently wrong. But it is fragile.

As soon as you add remote employees, multiple states, tighter labor regulations, or a challenging employee situation, that patchwork system starts to strain. And when it fails, it tends to fail expensively—through legal costs, compliance penalties, or turnover that could have been avoided.

The Financial Conversation Owners Often Miss

We spent a lot of time in this session talking about money, because that’s usually where these decisions get stuck.

Rob shared several real examples where companies moved into a PEO model and saw immediate financial impact, particularly around benefits. In one case, a 30-employee company absorbed a health insurance increase of over 30% before switching. Through Insperity’s access to larger benefit pools, they ended up saving nearly $150,000 annually while improving coverage.

That kind of result doesn’t happen every time, and Rob was very clear about that. Sometimes the numbers break even. Sometimes it’s an investment.

But here’s the mistake I see owners make: they compare the cost of an outsourced HR solution only to their current insurance premium or payroll provider.

They don’t factor in:

• What they’re paying lawyers for routine HR questions

• What it costs to fix mistakes after the fact

• How much executive time is being consumed by administrative work

• The cost of turnover caused by weak systems or unclear policies

When you zoom out, HR isn’t just an expense. It’s part of the company’s operating infrastructure. And weak infrastructure always shows up somewhere else in the business.

Growth Requires a Different HR Mindset

One of the most compelling points Rob made wasn’t about compliance—it was about growth.

He shared a story about a logistics company doing significant revenue with a very small team. Before outsourcing HR, the owners were buried in administrative details. After they cleared that burden, they were able to focus on sales, partnerships, and expansion. The result was meaningful top-line growth in a relatively short period of time.

HR didn’t create that growth.
But it removed the friction that was preventing it.

That’s an important distinction. At a certain stage, the question isn’t “Can we keep handling HR ourselves?” It’s “Is this the best use of leadership attention if we want to scale?”

Where This Matters Most

From both Rob’s experience and my own, there’s a consistent range where these issues surface most clearly. Companies with roughly 15 to 150 employees often feel caught in between.

They’re too big to wing it safely.
They’re not big enough to justify a full internal HR department.

That’s where I see the most risk—and the most opportunity.

We also discussed an extreme example: a company with over 1,300 employees and a single HR person. That’s not a cost-saving strategy. That’s a leadership blind spot. When systems don’t match the size and complexity of the business, something eventually breaks.

HR Is Not Just Risk Management

What I appreciated about Rob’s perspective is that he didn’t reduce HR to forms and policies. We talked about leadership development, culture, and the reality that many managers are promoted without ever being taught how to manage people.

Firing a leader to “save money” without a plan for who will actually run the operation. Promoting a top salesperson into management with no training. Ignoring culture until turnover becomes a problem.

These aren’t HR problems in isolation. They’re business problems. And they directly affect performance, retention, and profitability.

The Bigger Takeaway

This conversation reinforced something I believe strongly as a CFO: most growing businesses don’t need to do everythingin-house to be well run.

They need the right structure for the stage they’re in.

Outsourced HR, like fractional finance, outsourced bookkeeping, or specialized legal support, is not about giving up control. It’s about putting the right expertise in place so owners and leaders can focus on what actually grows the business.

If HR feels heavier than it should, that’s usually a signal—not a failure. It’s the business telling you it has outgrown its current operating model.

That’s exactly why we have conversations like this on Ask the CFO. Not to sell a solution, but to help owners and leaders see what’s really happening under the surface—and decide intentionally what comes next.