As companies grow, HR responsibilities multiply quickly. Payroll. Compliance. Benefits. Hiring. Performance management. Culture. The list gets longer and more complex with every new employee, every new state, and every new growth goal. Yet many business leaders try to manage it all internally for as long as possible.
At a glance, keeping HR in-house might feel cost-effective. But real cost often shows up in missed compliance deadlines, disorganized documentation, high turnover, and employee confusion or dissatisfaction. The fallout from even one mistake—whether it’s a wage-and-hour violation or a poorly handled termination—can be costly, distracting, and damaging to your company’s reputation.
The stakes are only getting higher.
- 36% of companies anticipate greater exposure to labor and employment litigation in 2025. (Source)
- The average cost of one bad hire is nearly $17,000, and the average cost of losing a good employee is over $30,000. (Source)
- And perhaps most importantly, employee expectations have changed. According to MetLife’s 2024 U.S. Employee Benefit Trends Study, 62% of employees say they expect their employer to support their mental health, and 70% expect personalized benefits that match their life stage or goals.
When HR is treated as a secondary responsibility of running a business, it’s nearly impossible to keep up.
At LBMC Employment Partners, we work with hundreds of high-growth businesses that started off DIY-ing their HR. And we’ve seen how easy it is to fall into common traps.
5 DIY HR Mistakes Growing Businesses Make
Here are some of the common pitfalls that happen when small businesses try to manage HR responsibilities in a rapidly evolving landscape:
1. HR is owned by someone who’s not an HR pro.
It usually starts with good intentions. A CFO, office manager, or COO steps in to handle HR tasks because they’re organized, great with people, or “good at wearing lots of hats.” But the reality is that HR is its own discipline. Managing benefits compliance, addressing employee relations, and navigating multi-state labor laws require deep expertise, not just administrative skill.
One of the most common issues we see is related to employee classification. Employers sometimes mistakenly label workers as independent contractors or exempt employees to simplify payroll or avoid overtime without realizing the legal consequences. Misclassification is one of the top triggers for Department of Labor audits, and it can lead to costly back pay and penalties.
When HR is a part-time responsibility, it doesn’t get the attention or strategy it deserves, and potential problems increase.
2. HR is reactive, not strategic.
Without a clear HR plan, most businesses operate in fire-drill mode. Policies get created after issues arise. Handbooks are updated after a compliance concern. Pay structures evolve after equity becomes a problem. It’s a cycle of reacting rather than proactively setting your team and your company up for success.
This reactive approach often leads to inconsistent policies across teams or locations. What’s acceptable in one department may be handled completely differently in another. That inconsistency creates employee confusion, and it can open your company up to legal risk if policies are perceived as unfair or discriminatory.
Strategic HR is about prevention, not damage control. And that only happens when HR is treated as a core business function.
3. Employees aren’t confident in HR.
When HR is fragmented or unclear, employees don’t know who to talk to or if they should say anything at all. That creates confusion, distrust, and serious risk. A 2023 study found that when employees lack confidence in HR, they’re less likely to report misconduct or engage in feedback conversations.
In today’s workplace, employees expect more than basic benefits. Team members want access to support that matches their life stage, personal goals, and mental health needs. DIY HR often results in limited or outdated benefit offerings that don’t meet modern expectations. That can hurt both retention and recruitment, especially in a competitive job market.
In contrast, clear HR leadership fosters transparency, trust, and a stronger culture.
4. Documentation is scattered and inconsistent.
Too many growing businesses rely on outdated employee handbooks, spreadsheets, or random Google Docs for critical information. It might work for a handful of employees, but as soon as you start hiring across states, onboarding new people, or facing an HR audit, this becomes a major liability.
Inconsistent or missing documentation is one of the top triggers for fines and lawsuits, especially under evolving regulations from the Department of Labor and EEOC.
5. Leaders are guessing or searching.
From hiring to firing, HR decisions carry real legal and cultural weight. Without an HR pro in your corner, it’s easy to fall back on advice from Google, ChatGPT, peers, or personal experience, which may not apply to your specific situation, industry, or state.
This kind of DIY decision-making leads to inconsistent policies, costly missteps, and a lot of second-guessing for your leadership team.
Red Flags: When It’s Time to Bring in the HR Experts
Here are a few signs that your DIY HR approach is holding you back or putting your business at risk:
- You’re growing across state lines and feeling unsure about varying employment laws.
- You’ve had to Google “how to terminate someone legally.”
- Your HR lead is juggling multiple other jobs and struggling to keep up.
- You’ve faced an employee complaint, audit, or benefits issue you didn’t feel equipped to handle.
- You’re about to fundraise, merge, or scale, and know your HR infrastructure needs to be tightened.
- Your turnover rate is creeping up, and you’re not sure why.
- You’re hearing employee feedback, but don’t have a structured way to respond to it.
These red flags don’t mean you’ve failed—they mean you’ve grown. And growth calls for better tools, better structure, and better support.
Why Partnering with LBMC EP is a Strategic Upgrade
At LBMC Employment Partners, “partner” isn’t just part of our name. It defines how we work.
We understand the unique challenges growth-stage businesses face. Unlike national providers that offer one-size-fits-all dashboards and round-robin service models, we stay grounded in what works: real people, real relationships, and real solutions.
Here’s what that looks like in action:
- Responsive Support from a Real Person: No ticketing systems or bots—just experienced HR professionals who know your business and can help you make confident decisions.
- Strategic HR Guidance: We help you look ahead, not just react. We can provide workforce planning, compliance strategies, and guidance tailored to your growth goals.
- Multi-State Experience: From California privacy laws to New York’s paid leave policies, we navigate the complexities of remote and distributed workforces.
- PEO Expertise: LBMC Employment Partners was the first Tennessee-based PEO to receive the Certified Professional Employment Organization (CPEO) designation in the first round of IRS certifications.
- High-Touch Service: We become an extension of your leadership team as trusted advisors who show up, dig in, and help your people thrive.
The result? Peace of mind, stronger infrastructure, and an HR foundation that can scale with your business.
Ready to Let the Experts Handle It?
At a certain point, the cost of doing HR yourself outweighs the cost of doing it right.
If you’re ready to stop guessing, avoid costly mistakes, and build an HR strategy that supports your growth, we’re here to help. Let’s talk about what’s working, what’s not, and how LBMC Employment Partners can take you where you want to go.
Contact us today to schedule a conversation with one of our HR experts.
