When your business is growing, so are your responsibilities – and few areas feel this more acutely than human resources.

For small and medium-sized businesses, deciding on the ideal HR team size can seem like solving a puzzle without the picture on the box. How many people should you hire? Should you outsource? And what roles are most important?

The answer? It depends.

“Many organizations look for a blueprint for their HR structure, but often, they don’t find one,” said Abraham Pollick,  VensureHR’s Regional Vice President of Learning. “Businesses need the permission to design what works for them, customized to their needs, industry and philosophy around people engagement.”

To help you better understand what your HR team should look like, we’re going to take a look at factors that influence team size, the evolution of HR structures as your business grows, and the role outsourcing can play in creating efficient, scalable HR solutions.

HR Scaling Considerations: Size, Industry & Strategy

One of the biggest misconceptions about HR is that there’s a universal formula to follow. In reality, your HR needs are shaped by three main factors: the size of your workforce, your industry, and your overall business strategy.

1. Company Size

HR team size looks vastly different for a 10-person team compared to a 500-person organization.

• 2–50 Employees: At this stage, HR is often a secondary responsibility handled by a generalist or office manager. Payroll and compliance take precedence over long-term strategy.
• 50–100 Employees: Growing businesses in this range typically need a dedicated HR professional who can juggle compliance, recruiting, and basic employee relations.
• 100+ Employees: By this stage, specialized roles become essential.

“You might have two HR professionals splitting responsibilities,” Pollick said. “One focused on recruiting and employee relations, while the other manages performance reviews, benefits, and strategy.”

2. Industry-Specific Needs

Some industries bring unique challenges that drive the complexity of HR requirements. Regulations, ever-changing state laws, court decisions and new federal legislation all increase complexity.

 “Highly regulated industries like healthcare, finance, and transportation require HR teams that can jump into complex compliance issues, Pollick said. “The stakes are simply higher in these environments.”

3. Leadership Philosophy

The way leadership approaches HR can significantly impact its structure. A CEO with a strong people-first philosophy might prioritize robust employee engagement initiatives, while another leader might focus on compliance or cost efficiency. Again, this isn’t a barrier to success. Instead, use this direction to craft your HR team, both internally and externally.

Evolving HR Structures: From Generalists to Centers of Excellence

HR structures evolve as businesses scale, shifting from all-purpose generalists to specialized teams. For many businesses, the transition is incremental.

1. Early Stages: Generalists Rule

When resources are tight, generalists are the backbone of HR.

“Smaller organizations benefit from having one or two people who can manage multiple roles,” Pollick said. “They might handle payroll, compliance, and recruiting all at once.”

2. Scaling Up: Finding Efficiency

As businesses grow past 150 employees, the ratio of HR professionals to employees often decreases. While a smaller company might have one HR person for every 50 employees, larger organizations often operate with one HR professional for every 300 employees.

This evolution often includes creating “lanes” or centers of excellence, where specialists handle distinct functions:

• Recruiting: Focused on hiring and talent acquisition.
• Compliance: Ensuring adherence to labor laws and industry regulations.
• Learning and Development: Supporting employee growth and retention.
• Employee Relations: Managing conflicts, culture and engagement.

“Scaling without reassessing your HR structure can lead to inefficiencies,” Pollick said. “Businesses need to take time periodically to ask, ‘Is this structure still working for us?’”

Outsourcing: A Strategic Partner for Growth

For many small businesses, outsourcing HR functions offers a cost-effective way to access expertise without the overhead of a full in-house team. The key is to find a partner that takes the time to learn YOUR business and its specific needs and challenges. Cookie-cutter solutions are never the answer.

“Outsourcing can fill critical gaps for businesses at any stage,” Pollick said. “It’s about meeting clients where they are and helping them scale efficiently.”

Four Reasons to Outsource HR

1. Cost Efficiency: Outsourcing provides access to services like payroll, compliance, and benefits management at a fraction of the cost of building an internal team.
2. Scalability: Whether you need compliance support or a full-service solution, outsourcing can adapt to your business’s changing needs.
3. Expert Guidance: Pollick said, “At Vensure, we research thousands of laws and regulations every month to keep our clients compliant. That peace of mind is invaluable for smaller businesses.”
4. Buying Power: High-quality PEOs are able to pool their clients to get better deals on benefits, including health insurance. This is particularly beneficial for small businesses that otherwise may struggle to provide health coverage for their employees.

When to Consider Outsourcing

• You’re under 100 employees and don’t need a full-time HR team.
• You’re expanding into new markets or dealing with increased compliance complexity.
• You want to free up internal resources to focus on core business priorities.

The Human Factor: Employee Engagement & Company Culture

Effective HR isn’t just about compliance or processes – it’s about people. In fact, people have to come first or nothing else matters. As Pollick said, engagement often drives better outcomes than policy changes alone.

“I worked with a client who wanted to rewrite their attendance policy to address tardiness,” Pollick said. “Instead, we reimagined their company values and pushed them out to employees. Within six months, engagement improved, and attendance issues decreased without harsh policies.”

Engaged employees don’t just show up on time, they drive customer satisfaction and business success. This underscores the importance of building a culture where people feel valued and connected to the company’s mission.

The Skills Every HR Professional Needs

Scaling HR is about more than adding headcount. It’s about equipping HR professionals with the right skills to support growth. While this is a brief list, it includes the pillars to build from:

• Business Acumen: HR professionals need to understand the business they work for. It makes them more credible and helps them provide relevant guidance.
• Leadership & Strategy: Balancing long-term planning with day-to-day operations. The best HR pros are doers AND thinkers.
• Practicality: Translating HR theories into actionable advice. Employees are busy and don’t want to get bogged down in boring processes that don’t show clear impact.
• Curiosity: The best HR professionals are always curious – they ask questions, dig deeper and tailor their solutions to the business.

Permission to Build What Works

At its core, scaling HR is about giving yourself the permission to create what your business needs.

“There’s no wrong or right HR structure,” Pollick said. “The key is finding or building what’s relevant to your business and adapting it over time.”

For small to medium-sized business owners, this approach offers a roadmap – not a rigid blueprint – for navigating HR’s evolving role in your organization.

Whether you rely on a generalist, outsource to experts, or build centers of excellence, the ultimate goal is the same: to support your people, align with your strategy, and drive sustainable growth.

The Final Word

Remember, HR isn’t one-size-fits-all, and it shouldn’t be. By understanding your business’s unique needs and planning for the future, you can build an HR structure that grows with you and empowers your team and your business for years to come.