72% of People Running HR at Small Businesses Have Felt Unqualified for a High-Stakes Situation, Study Finds

New research finds 39% of small businesses have no dedicated HR department or employee, and 42% of those who took on HR duties got no pay increase for it.

CLEARWATER, FL, UNITED STATES, October 21, 2026 /EINPresswire.com/ — At many small businesses, human resources belong to whoever happens to be nearest, whether that is the founder, an office manager or a coordinator who once helped with hiring paperwork. A new study from FrankCrum finds that nearly three-quarters of the people handling HR at small businesses (72%) have felt unqualified or unprepared for at least one high-stakes HR situation.

The survey of 1,000 small business owners and employees who handle HR at their companies examined how HR work is assigned and paid, how much time it takes, how people are trained for it, how records are kept, how generative AI is used, and what worries respondents most. Seven in 10 (71%) said that uncertainty had a direct consequence in the past year, most often a delayed termination.

The findings suggest that small business HR frequently runs on improvisation, and that the strain shows up in concrete ways, from postponed disciplinary decisions to AI-drafted guidance that never reaches an HR reviewer.

Key Takeaways

• 39% of small businesses have no dedicated HR department or employee.
• 42% of people who took on HR duties received no pay increase for it.
• Men were more than twice as likely as women to receive a compensation increase for taking on HR (45% vs. 22%).
• 43% spend 10 or more hours a week on HR, and 59% say that time has grown in the past two years.
• 72% have felt unqualified for a high-stakes HR situation, most often employee conflict (29%), harassment complaints (26%) or discrimination complaints (25%).
• 30% delayed a termination in the past year because of HR uncertainty.
• Only 25% hold a formal HR certification.
• 50% of small businesses have used AI for HR, including 62% of Gen Z respondents compared with 36% of Gen X.

HR Often Falls to Whoever Is Closest

At many small businesses, HR is a side duty attached to someone else’s job.

• 15% have the owner or founder handling HR
• 14% share it informally across employees or departments
• 10% rely on an office manager, operations leader or other non-HR employee

Titles tell a similar story. Only 13% of respondents involved in HR decisions held an HR-specific title, while 29% were administrative assistants, coordinators or specialists. Gen X respondents were the least likely to report a dedicated HR department (26%, compared with 47% of millennials and 49% of Gen Z) and the most likely to say the owner handles HR directly (20%). The findings suggest this may reflect differences in role, with younger respondents more likely to work at businesses that already had an HR function in place.

A Job Many Never Asked For, Often Without a Raise

HR duties frequently arrived without a negotiation. About a third (34%) actively wanted the responsibility, and 43% accepted it to advance their careers, but 15% inherited it because someone had to, and another 7% said it simply fell to them.

• 42% received no pay increase when HR duties were added
• 27% received neither a raise nor a title change
• 15% received a title change only
• 24% received both a raise and a new title

The split by gender is stark. Men were more than twice as likely as women to report a compensation increase (45% vs. 22%), while women were more likely to receive neither pay nor title (34% vs. 21%). Women were also more likely to handle HR from an office manager or operations seat (13% vs. 8%). The findings suggest that when responsibilities accumulate gradually, there is rarely a natural moment to renegotiate pay, and that gap appears to fall harder on women.

HR Is Becoming a Second Job

For many respondents, HR is no longer a few spare hours a week.

• 43% spend 10 or more hours a week on HR duties
• 13% spend 20 hours or more
• 59% say their HR time has increased over the past two years, including 20% who call the increase significant

Millennials carry the heaviest load, with 49% spending 10 or more hours a week, compared with 46% of Gen Z and 33% of Gen X. Nearly two-thirds of both Gen Z and millennial respondents (65%) said their HR time had grown, against 46% of Gen X. Men were also far more likely than women to report a growing workload (70% vs. 46%). For people handling HR on top of their original role, the findings point to a rising risk of burnout.

The Moments That Catch Stand-In HR Managers Unprepared

Most HR work is routine until a complaint or a termination lands on someone without the training to handle it.

• Employee conflict and disputes: 29%
• Harassment complaints: 26%
• Discrimination complaints: 25%

Over the past year, 71% reported a concrete consequence of that uncertainty, including delayed terminations (30%), delayed disciplinary action (26%), employee issues left unaddressed (22%), and delayed pay or promotion discussions (21%). A quarter (25%) brought in outside HR assistance, and 20% turned to a lawyer.

Younger respondents felt the gap most acutely. Three-quarters of Gen Z (76%) and millennials (74%) have felt unqualified, compared with 62% of Gen X, and 85% of Gen Z reported a direct impact in the past year versus 53% of Gen X. The findings suggest the most common cost of unprepared HR is a decision that waits rather than a dramatic misstep.

Training Is Largely Left to Chance

Formal preparation is the exception among people running small business HR.

• 25% hold a formal HR certification
• 39% received employer-provided training
• 32% taught themselves
• 12% have no HR-specific training at all

Gen X respondents had the lowest certification rate (13%), and 25% reported no HR training, five times the share of millennials (5%). Gen X was also the least likely to report feeling unqualified, which may reflect longer on-the-job experience or less awareness of the legal exposure involved.

Half Have Turned to AI, and Not All of It Gets an Expert Read

Half of respondents (50%) said their business has used generative AI for HR in the past year. The most common uses were researching HR questions (34%), creating onboarding materials (33%) and drafting handbook content (26%), with 25% using it to generate guidance for disciplinary actions or terminations.

• 58% say HR or legal always reviews AI output
• 25% say it is usually reviewed
• 11% send it only to non-HR staff
• 5% have no review process

Adoption is generational, at 62% of Gen Z and 57% of millennials compared with 36% of Gen X. Yet Gen X respondents who use AI were the most likely to route its output only to non-HR staff (17%, vs. 13% of Gen Z and 6% of millennials). The findings suggest review practices have not kept pace with adoption, particularly for sensitive tasks like termination guidance.

Spreadsheets, Paper Files and the Fear of a Lawsuit

Records are scattered across whatever tools a business already has. Nearly half (49%) use payroll software with built-in HR functions, 43% use spreadsheets, 42% keep paper documents, and 33% rely on email chains, while 34% use a dedicated HR platform. Documentation errors were the most common administrative problem in the past year (27%), and only 40% said they were very confident in their workers’ compensation records.

Respondents’ top concerns were employee retention (28%), employee lawsuits (25%) and wrongful termination claims (23%). Gen X was most worried about retention (31%), while Gen Z ranked wrongful termination first (31%), followed by lawsuits (29%). The findings suggest these worries track position more than age, with owners focused on the cost of turnover and younger staff more exposed to the legal risk of handling HR without training.

Taken together, the findings describe HR at small businesses as work that gets done whether or not anyone was formally assigned to it. The open question for many owners is whether the person doing it has the time, training and backup the job requires.

View the full study here:
https://www.frankcrum.com/research/accidental-hr-manager-smb-study

About

FrankCrum is a professional employer organization (PEO) founded in 1981 and headquartered in Clearwater, Florida. The company provides human resource services, payroll, and workers’ compensation insurance to more than 4,800 businesses nationwide that collectively employ more than 90,000 people. FrankCrum’s HR consultants advise business owners on hiring, performance management, and employee relations–the same high-stakes situations this research found small business teams often handling without a dedicated HR professional. Learn more at www.frankcrum.com.

Devon Murray, Sr. Director of Marketing
FrankCrum
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