What Small and Midsize Companies Actually Need from HR(And Why Most Are Buying the Wrong Thing)

A CEO and I were on a call with her HR director last fall. The HR director is excellent — she'd built the company's whole compliance and benefits operation from scratch, and the company had doubled in size on her watch. About thirty minutes in, the CEO said something I hear more often than you might think:

"I love working with you. And I keep asking you to fix things that don't have HR answers. I don't even know what to call them. I just know they aren't getting better."

The HR director exhaled. She'd been feeling the same thing from the other side.

Here's the thing about HR for small and midsize companies: most of the conversation is about the wrong problem. Founders and CEOs at growth-stage companies are told they need HR. So they go shopping for HR. They hire an HR generalist, or buy a PEO, or bring in a fractional HR consultant.

And then six months later they're still up at night wondering why two of their best people just gave notice, why their VP of Sales and VP of Product won't speak to each other, and why their "values" feel like something printed on a coffee mug instead of something anyone actually lives.

That's not an HR problem. Or — to be fair to a lot of really capable HR people — it's not just an HR problem.

What HR actually is (and isn't)

Let's untangle this, because the language matters.

Traditional HR covers compliance, payroll, benefits, employee relations, and the thousand small administrative things that keep a company legally functional and humanely staffed. That work is real, it's important, and small and midsize companies do need it — usually sooner than they think.

But what most growth-stage CEOs are actually feeling at 11pm isn't a compliance problem. It's a people problem. And those are different beasts.

People problems look like:

• A leadership team that worked great at 25 employees and is buckling at 75

• Managers who got promoted because they were great individual contributors, and now nobody's quite sure how to coach them

• A founder drowning in decisions that shouldn't be theirs anymore

• A culture that's drifting, and nobody can name exactly why

• Two senior leaders whose unspoken conflict is quietly costing the company millions

  
  

That's organizational development work. Leadership work. Culture work. It lives one level underneath the HR conversation, and it's almost always what's actually keeping the CEO up.

What you actually need at each stage

Here's what I've watched work, across roughly the same set of growing companies.

Under ~30 employees, you probably don't need an HR person yet. You need clean systems (payroll, benefits, a basic handbook) and a fractional HR resource or PEO for compliance. What you do need is to start being intentional about how you hire, how you onboard, and what you're rewarding. That's not HR — that's you.

30 to 75ish employees is where things get interesting. This is where most companies make their first HR hire and discover that one person can't do everything. You need administrative HR and someone helping you think about leadership development, manager training, and culture. Often this is the moment to bring in an external partner who works alongside whoever's in the seat — not to replace them, but to think bigger with you.

75 to 200ish employees, you usually need both: a real HR leader (not a coordinator), and ongoing organizational development support — internal, external, or both. By this stage, the cost of not developing your managers is enormous and almost invisible. Engagement quietly tanks. Good people leave. The team you built can't carry the company you're trying to build.

What to look for, no matter who you hire

Whether you're hiring HR in-house or bringing in an outside partner, three things matter more than credentials:

1. Can they tell you something true you didn't want to hear? Strategic partnership needs someone who'll push back when it matters — not just someone who executes.

2. Do they think in systems? A good people partner sees the connections between your comp structure, your management bench, your culture, and your strategy. If they only talk policies, that's a coordinator, not a strategist.

3. Do they make your hardest people decisions feel less lonely? This one's underrated. You're going to face decisions that don't have clean answers. The right partner doesn't make those decisions for you, but they make sure you're not making them in the dark.

One honest thing

A lot of small and midsize companies are paying for HR and wondering why nothing's getting better. Usually it's because they've bought tactical when they also need strategic, or administrative when they needed developmental. It's not their fault — the market doesn't make it easy to tell the difference.

This is most of what I do, honestly. I partner with CEOs and leadership teams of growth-stage companies on the people questions underneath the HR question — manager development, leadership team dynamics, scaling culture, the conversations that have been postponed too long. Sometimes alongside an HR leader, sometimes before there is one, sometimes to help figure out who that person should be.

If you're somewhere in this stretch right now — first HR hire, or wondering whether the HR you have is the right fit, or unsure whether you need HR at all — it's worth getting clear on the actual question before you spend another quarter on the wrong answer.

If any of this is landing, I'd love to hear what you're seeing on your end.