I am no longer shocked to meet with owners of successful businesses who have absolutely no human resource infrastructure or concrete policies in place. Many entrepreneurs who go into business and experience success at doing what they know how to do tend to err on the side of recklessness when it comes to protecting the assets they work so hard to accumulate. Whether the task of human resource management is performed in house or outsourced, it is an unavoidable cost of doing business in today’s litigious environment.

The most fundamental step to implementing a human resource system within a small business environment is crafting a set of company policies that are not only compliant with the law, but also in line with company culture and the future direction of the business. Once the company policies have been decided upon, it is imperative to integrate those policies into an employee handbook, to review those policies with existing and new employees and to obtain a signature from each staff member in acknowledgement. This is quite simple in a new business, but for the existing business that needs to present company policies to tenured employees, the situation can be a bit more problematic.

I met with a business owner last week who has a growing company with almost no turnover and a growing number of employees. Over the past 5 years this company has grown from just a few heads to 12, and there is an expectation to be at 15-18 full-time employees by the end of 2012. This gentleman expressed to me that there has been virtually no turnover of team members over the years and that he intends to continue to expand his offerings and to celebrate the success of the company with his staff in the form of compensation, benefits and profit sharing. This sounds like a place we would all like to work.

While the success story of a company such as this is commendable and the genuine respect for the importance of human capital deserves praise, this is a business with significant liability. The creative company culture and the relaxed environment of this business have been proven to be very good for employee productivity and have created a significant competitive advantage. At the same time, inappropriate comments, language and actions tend to be blown off as the norm within the office, and the current staff members deal with one another like family.

Is there really a need for company policies amongst a group of extremely productive employees who all love their jobs and are team players? If company policies are implemented and existing staff members are asked to sign off at this late stage in the game, will they be offended or upset? If protecting the assets of the business and the jobs it provides are important, then company policies must be implemented, acknowledged and followed. Furthermore, a comprehensive human resource system that is customized to the organization should be implemented, and the longer a business waits to do so, the more costly, time consuming and aggravating to employees it will be. Maybe the answer lies within the organization or maybe human resource outsourcing is the appropriate solution, but doing nothing is like playing Russian roulette. Hiring a third-party provider not only provides expertise unavailable to most small and medium sized organizations, but it tends to divert the blame for implemented programs to the outside consultant.