For nearly 40% of small businesses, HR responsibility falls to whoever's closest, often without training, extra pay, or backup when the stakes get high.
Human resources is a fast-growing field, projected to have over 17,000 job openings in the next few years. But many companies aren’t hiring experienced HR professionals. Among American small businesses, having a full HR department is rare – but so is having a dedicated HR professional. More and more companies are relying on whoever is available to do the work, rather than finding the best person possible for the job. In this way, HR is becoming deeply undervalued, and the art of effective human resource management is going unlearned.
To learn who is actually running HR at small businesses and what they're leaning on to do it, FrankCrum surveyed 1,000 small business owners and employees who handle HR at their companies. We asked about their stressors, responsibilities, and whether or not they feel qualified to do the job assigned. Our data reveals a workforce that wants to do well, but isn’t always given the resources to do so.
Ask who runs HR at a small business, and the honest answer is often nobody in particular. It's the founder. It's the office manager who picked up hiring paperwork one busy quarter. It’s the marketing specialist who knows a little bookkeeping. That arrangement holds until something goes wrong, and the de facto HR manager isn’t sure how to handle it.
Among the small businesses surveyed, responsibility for HR broke down like this:
Among those who played a role in HR decisions, only 13% held an HR-specific title. Even more (29%) were administrative assistants, coordinators, or specialists, meaning decisions with real legal consequences were being made by staff with no management title at all.
Gen X respondents were by far the least likely to report a dedicated HR department (26%), against 47% of millennials and 49% of Gen Z. They were also the most likely to have an owner or founder handling HR directly (20%). Gen X entrepreneurs are notably skeptical of corporate standards and processes, which may lead them to believe HR is a job “anyone” can do, including themselves. Younger generations may have been hired into more established businesses that had an existing department, and not yet have the career standing to make institutional decisions.
What starts as a quick favor or a temporary fix turns into a permanent position, but for the employee doing the HR work, their title and pay rate often stay the same. When responsibilities are slowly added to a worker’s plate, there’s no natural time to talk about pay or title, leading to many doing the work for months before being formally recognized by the company.
Among people who took on HR duties at a small business, the position started in multiple ways:
Wanting the job turned out to be the minority position. Just 34% said they actively wanted the responsibility, while 43% were accepting it to advance their career. Another 15% inherited HR because someone had to, and 7% said it simply fell to them or that they had little real choice. Taken together, nearly a quarter (23%) never actively chose this work.
For too many, the change in job description was not met with a change in salary. Only 34% saw their compensation increase when HR duties were added. A further 15% got a title change and nothing else. Over a quarter (27%) received neither a title change nor a raise — just extra responsibility. Combined, 42% absorbed HR work without a pay increase. Fewer than one in four (24%) received both a raise and a title change.
Men were more than twice as likely as women to have received a compensation increase when HR responsibilities landed on them, at 45% against 22%. Women were correspondingly more likely to get neither pay nor title, at 34% compared with 21% of men. Women were also more likely than men to be running HR from an office manager or operations seat rather than a dedicated HR role (13% vs. 8%), reflecting the way that women in the workforce are consistently given extra responsibilities without extra pay. A responsibility nobody negotiated is one nobody has to pay for. Many companies use that to their advantage.
Whatever the org chart says, many of the people handling HR at small businesses are giving up hours every week to a job most of them never trained for. For those who are also handling their regular responsibilities on top of HR tasks, this can start to feel like a second job.
Only 8% of the people handling HR spent under two hours a week on it, and 21% put in two to four hours. The rest were well past that. Over a quarter (28%) spent five to nine hours weekly, and 43% spent 10 or more. Another share (13%) reported 20 hours or more, a half-time job stacked on top of what they were actually hired to do. Millennials were putting in the most work, with 49% of the generation spending 10 hours or more on HR tasks, compared to 46% of Gen Z and 33% of Gen X.
Nearly three in five (59%) said that the time they spend on HR tasks has increased in the past two years, including 20% who called that increase significant. Over a third (37%) said their workload had stayed the same, and only 4% said it had decreased. Younger respondents were picking up the most HR work in recent years: 65% of both Gen Z and millennials said they were spending more time on HR tasks than two years ago, against 46% of Gen X. This increase could easily lead to burnout among employees, as they continue to take on new tasks without a reduction in their former workloads. Burnout becomes even more likely when they’re handling high-stakes HR situations with little to no training.
Men were far more likely to report the workload growing over two years, at 70% compared with 46% of women. This could be due to men genuinely taking on more HR work, or could reflect the fact that women have long been expected to do them. While women may have taken on various HR tasks over the course of their careers, this may be the first time many men are in this position.
Most HR work is administrative. Then, an employee files a harassment complaint, or a termination has to happen by Friday, and the person handling it is an office manager with no HR training. Having the wrong person in these situations can make a tense moment even worse, and the de facto HR workers know it.
Nearly three-quarters (72%) of respondents have felt unqualified or unprepared for at least one high-stakes HR situation. These include:
Not knowing how to handle these situations often leads to delays in processes that are meant to help employees and HR alike. Over the past year, 71% reported at least one concrete consequence of HR uncertainty. These included delayed termination (30%), delayed disciplinary action (26%), employee issues going unaddressed (22%), and delayed pay and promotion discussions (21%).
When the decision couldn't wait, many outsourced the work. A quarter (25%) brought in outside HR assistance, and 20% went to a lawyer. To protect the company, many de facto HRs brought in people who had the training they needed. Among those who took on HR responsibilities, only 25% held a formal HR certification. For 39%, employer-provided training was the entirety of their preparation, meaning whatever their company happened to offer was all they got. Another 32% taught themselves, and 12% were doing the job with no HR-specific training of any kind.
Gen Z respondents felt the most unqualified, at 76%, with millennials at 74% and Gen X at 62%. This lack of training leads to consequences: 85% of Gen Z and 77% of millennials reported a direct impact in the past year, against 53% of Gen X.
Gen X was the least prepared of any group. Their certification rate was the lowest at 13%, and 25% had no HR training at all, five times the amount of millennials who could say the same (5%). What the generational split really shows is how much of this comes down to chance — who happened to get trained, and who happened to get handed the job. While younger generations sought out training and jobs in their field, Gen X employees seemed to take on whatever needed to be done, regardless of their experience.
Even those who are not directly involved in HR decisions know how a lack of experience can affect how a company runs. Small business owners and their employees are considering all the hypotheticals and worrying about how their DIY HR department will respond in high-stakes situations.
Small business owners and leaders are most worried about these potential HR issues:
The top three reflect a single anxiety: losing good people and getting sued over the way one of them left. Gen X was most worried about employee retention at 31%, ahead of Gen Z (28%) and millennials (24%). Younger respondents were more concerned about legal affairs: wrongful termination led for Gen Z at 31%, with lawsuits close behind at 29%, while millennials put lawsuits first at 27% and wrongful termination at 24%.
That split tracks position more than age. Gen X is the most likely to be owners or founders. An owner sees the direct cost of employees quitting – a vacancy to fill, a customer relationship to rebuild from scratch. Younger respondents are more often the ones absorbing HR tasks without training, putting them in the position of real legal liability if a lawsuit happens. Early-career professionals may not feel confident in their ability to sign off on payroll, let alone protect the company from arbitration.
HR records at a small business live in a spreadsheet. Or a filing cabinet. Or in an email thread, where someone hopes they can find it again when it matters. The I-9s sit in one place, the performance write-ups in another, and the signed acknowledgment that an employee received the handbook is wherever the person who sent it keeps their sent mail. None of that is a problem until an attorney sends a document request with a deadline attached, or an employee uses AI to bridge the gaps.
Payroll software with built-in HR functions was the most common way to manage HR records, at 49%. Spreadsheets followed at 43%, paper documents at 42%, and email chains at 33%. Only 34% used a dedicated HR platform, and 14% hired a third-party provider. Often, HR gets handled with whatever software the company has already subscribed to.
When asked what HR administrative problems they'd run into over the past year, respondents named documentation errors most often, at 27%. Benefits enrollment issues followed at 25%, and payroll recordkeeping at 24%. When asked how current their documentation was, only 40% said they were very confident about workers' compensation records — the file most likely to matter on a bad day.
To fill in the gaps, many are turning to AI. Half of the respondents said their business has used AI for HR purposes in the past year. These were the tasks most commonly allocated:
A quarter of AI users are turning to it for one of the most sensitive HR tasks possible – and may not always be receiving good advice. AI is notorious for giving false or incorrect answers, and can pull from unverified sources, making HR professionals go into discussions with wrong information. Fortunately, though, most of that output gets checked. At 58% of businesses, HR or legal always reviews AI output, and usually reviews it at another 25%. But another 11% only send AI content to non-HR staff, and 5% have no review process whatsoever.
Younger HRs were more likely to augment their jobs with AI. Gen Z used AI for HR at 62% and millennials at 57%, while Gen X trailed at 36%. Older workers didn’t seek oversight, though. Gen X was likeliest to route AI content only to non-HR staff, at 17%, against 13% of Gen Z and 6% of millennials. While younger professionals are more comfortable using AI tools, they’re also more familiar with their flaws. Older workers are using AI as the last step in the process, when it requires rigorous oversight — especially in the world of HR. As AI tools become more and more common in the workplace, a thorough and documented review policy is more important than ever.
HR does not go undone at a small business. Someone still decides whether a termination will hold up, and someone still keeps the file a lawyer will ask for a year from now. The work happens either way. What changes is whether anyone admitted it was being handed to a person, and whether that person was given anything to handle it with.
For small business owners, the solution is to take decisive action. Write down who owns terminations and who keeps the personnel file, and that question stops being improvised in the week it matters most. Decide in advance who gets the call when a situation outruns what the person in the chair knows – an employment attorney or an outside HR line, whichever fits – and put the number somewhere findable at 4 p.m. on a Friday. AI output needs the same discipline. A chatbot draft of a workplace policy reads exactly like counsel's work until someone with HR expertise reads it closely, and the companies that get burned are the ones that never designated an editor.
None of that is paperwork for its own sake. Small businesses that treat HR as a real assignment, with a budget behind it and someone to own these processes, face fewer consequences and spend less time chasing documentation.
FrankCrum surveyed 1,000 small business owners and employees responsible for handling HR at their companies via Pollfish, an online survey platform. The survey examined how HR responsibility is assigned and compensated, time spent on HR duties, formal training and certification levels, confidence handling high-stakes HR situations, documentation practices, generative AI adoption and oversight, and top HR-related concerns. Results were analyzed and stratified across demographic segments, including generation and gender. Percentages reflect self-reported data and may sum to more than 100% when multiple selections were allowed.
FrankCrum is a professional employer organization founded in 1981 and headquartered in Clearwater, Florida, providing payroll, employee benefits, workers' compensation coverage, and HR support to small and mid-sized businesses nationwide. Its HR consultants advise business owners on hiring, performance management, and employee relations — the same high-stakes situations this research found small business teams handling without training or a dedicated HR professional on staff.
The findings in this research may be shared for noncommercial purposes only. If you reference this data, please credit FrankCrum and include a link back to this page so readers can review the full study.