Small Staff, Big Problems: Why in-house HR Can Do More Harm Than Good

Most MLSs and Associations have small staffs and lean operations. They do a lot with very little. With small teams, tight budgets, and a focus on member service, it’s easy to feel pressure to assign someone internal to “handle HR.” But here’s the reality: Most real estate organizations do not need a dedicated internal HR staff member until they hit at least 50 employees.

Until an organization hits that threshold, the combination of a strong CEO, reliable payroll processing service, and external Human Resources consultant can be effective. In fact, trying to wedge HR responsibilities into a small staff can create more problems than it solves, especially when it comes to handling sensitive or complex personnel issues

The Hidden Risks of In-House HR in Small Teams

Assigning HR responsibilities to someone on a small team may feel like a step forward, but it introduces several major risks:

• Conflict of interest: When peers are tasked with resolving employee conflicts or investigating sensitive issues like sexual harassment, employee conflict or performance issues, neutrality goes out the window. Personal relationships cloud judgment, and trust in the process erodes.
• Lack of training: Most small organizations can’t afford a certified HR professional. That means compliance, documentation, and policy handling are often inconsistent, exposing the organization to legal risks.
• Bias in advocacy: Staff leaders tend to champion compensation and recognition for their own teams (or themselves) more readily than for peers in other departments. That’s not malicious, it’s human nature. But without a neutral third party assessing job skills and experience objectively pay scales and career paths can go askew. 
• Legal and reputational risk:  When someone managing HR is not actively trained in state-specific employment law and focused on staying current on the incessant changes to labor law they may put the company at risk. Someone that doesn’t monitor compliance obligations, or best practices for handling employee discipline and conflict can make mistakes and mishandle delicate situations. Employment regulations vary widely across states and change regularly, and failing to follow correct procedures for documentation, terminations, or harassment investigations can expose the organization to lawsuits and costly settlements. Just as you wouldn’t let an unlicensed person handle your legal work or audit your books, you shouldn’t let untrained staff manage sensitive personnel issues, especially when the stakes involve people’s careers, livelihoods, and your organization’s integrity and legal risk. 

Compensation and Pay Equity Require Objectivity

As your organization grows, pay equity across departments, experience levels, education, and job scope becomes a critical leadership responsibility. CEOs must pay close attention to how roles are evolving and ensure there is consistent logic behind pay scales and title structure.

Too often, organizations rely on internal “gut checks” or informal benchmarking, which rarely results in equitable outcomes. That’s why an external compensation analysis, guided by someone with a deep understanding of real estate association and MLS roles, is so important.

WAV Group uses a localized, data-rich compensation database paired with our own proprietary research gathered directly from Association and MLS leaders across the country. This dual approach provides a tailored, trustworthy, and actionable look at how your team stacks up—and where adjustments may be needed.

Confidentiality is Critical

One of the most overlooked challenges in small organizations is confidentiality. It’s incredibly difficult for employees to voice concerns when the person handling HR is a peer, or worse, personally involved in the incident. Many Association and MLS staffs have worked together for a long time. They become a “family” with all of the good of that and the petty jealousies and conflicts. Without a safe, confidential channel for employees to speak freely, organizations risk hidden morale issues, turnover, or legal consequences.

If you’re not yet at the 50-employee mark, resist the urge to appoint internal HR. Instead, lean on tools and partners that can help you manage risk, support your team, and uphold fairness without the burden of a conflicted or under-resourced internal function.

Want a Clearer Picture of Your Organization’s Compensation Health?

WAV Group has exclusive access to a nationally licensed, localized compensation database, purpose-built to assess pay equity in like-sized organizations. Coupled with years of experience and industry-specific knowledge, we help real estate organizations make informed, objective decisions about compensation, staffing, and organizational structure.

If you’d like to explore a customized compensation analysis for your Association or MLS, we’re here to help.