EP 140: AI Governance for Small Business - The 4 Things You Actually Need | AI & HR Series Ep. 5
Series: AI & HR (5 of 6) · Host: Kerri Roberts · Run time: ~27 minutes
🎧 Listen on Apple Podcasts: https://podcasts.apple.com/us/podcast/dont-waste-the-chaos/id1723388520 · Spotify: https://open.spotify.com/show/0nmxuIYEmqpbqZxzoxgiMY · Buzzsprout: https://www.buzzsprout.com/2471085
📺 Watch on YouTube: https://youtu.be/AvndRA7jndQ?si=lW-ZC5rty_HjC1Z1
📖 Read the full transcript below
Episode Summary
No policy doesn’t mean no AI. It means your team is using it anyway, on personal accounts, with data you probably wouldn’t have approved, and they’re not telling you. That’s shadow AI, and it isn’t a discipline problem. It’s a governance gap. The word governance is what stops most small business owners cold. It sounds like a compliance department and a standing committee and a 40-page framework, and if you’ve got 30 employees, none of that fits. So Kerri kills the word first, then rebuilds it into something a small to mid-sized business can actually stand up: a one-page usage policy, one named human who owns it, a do-not-feed-it list of data that never goes into a public model, and a review rhythm frequent enough to keep up with tools that change monthly. She also gets into the part most owners skip. AI governance is a finance issue, not an IT issue. Employment-related AI law is moving fast in a handful of states, existing anti-discrimination law applies whether or not your state has an AI statute, and the awareness gap among HR professionals is wide enough to be its own risk. Plus the human side: what happens to trust and productivity when leadership says nothing at all, and why 57% of employees who use AI at work are hiding it. Governance is just a policy, an owner, and a rhythm for checking it. Everything else is decoration.
In This Episode
• Why “no AI policy” doesn’t mean no AI, it means shadow AI you can’t see
• How to strip the word governance down to something a 30-person company can actually use
• The four pieces of AI governance: the one-page policy, the named owner, the do-not-feed-it list, and the review rhythm
• Why a policy saved to a Drive folder with no human’s name on it isn’t governance at all
• What belongs on your do-not-feed-it list, and why the list is different for every company
• Where employment-related AI law actually stands right now, including what applies in Missouri
• Why your existing anti-discrimination obligations still apply even with no AI statute on the books
• What happens to employee trust and productivity when leadership never communicates a plan
• How to pick your AI owner this week, even if it isn’t you
Chapter Timestamps
0:00 Your team is already using AI (and hiding it)
1:20 Where we are in the AI and HR series
1:50 Why Kerri’s in glasses this week
4:27 Killing the word “governance” before it scares you
5:50 Only 49% of organizations have an AI policy at all
6:53 A policy is not governance if nobody owns it
8:57 The bereavement question: why policies need a human
9:50 The one-page policy and the named owner
11:00 The do-not-feed-it list and the review rhythm
12:30 Compliance: why this is a finance issue
13:21 The awareness gap in states that already regulate AI
14:20 Missouri’s status as of August 2026
15:35 Illinois, New York City, and what’s coming in Colorado
17:53 Keeping it human: what AI frees managers to do
20:15 Communicate the plan, and people feel 3x more prepared
22:00 57% of workers have hidden their AI use
23:30 How to pick your AI owner this week
24:51 Your action item and what’s coming next week
Resources Mentioned
• The HR Easy Button (book): saltandlightadvisors.com/thehreasybutton - paperback, hardback, and Kindle on Amazon
• HR Foundations (course, under $400): saltandlightadvisors.com/hrfoundations
• Free Mini HR Audit: saltandlightadvisors.com/hraudit
• Companion blog post: Your AI Policy Needs a Human’s Name On It - saltandlightadvisors.com/blog
• Earlier in this series: How to Write a One-Page AI Policy - https://youtu.be/RxDlv8fUctM?si=DCnoxW8vceWeBPu9
Episodes in the AI & HR Series
Ep 1 - Is your organization actually ready for AI?
Ep 2 - How to use AI in human resources
Ep 3 - How to write a one-page AI policy
Ep 4 - AI and the middle manager (and the shadow AI nobody’s talking about)
Ep 5 - AI governance for small business (you’re here)
Ep 6 - Skills over roles: workforce planning when the job description won’t sit still (coming next week)
Your Action Item
Before lunch tomorrow, name the one person who owns AI at your company, and tell them. Not a folder, not a committee, one human. Ask rather than assign if you can, because this will take real time out of their week, and give them enough authority to actually say yes and no. Then put a standing check-in on the calendar so they have somewhere to bring questions. That single decision is about 80% of your governance plan, because AI can draft the rest and you can react to it.
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Full Transcript
Your team is already using AI (and hiding it)
Your team is already using AI, probably on their personal accounts, probably putting data in there you don’t necessarily want them to. And you have a governance issue and you’re not addressing it, or at least the majority of organizations are not addressing it.
And when I say governance, we don’t want to be overkill for the small to mid-sized business owner. You’ve got 30 employees. I’m not saying you need a chief of information technology or an AI chief of staff or whatever that looks like. I don’t want to overblow it, but we do want to address it.
Where we are in the AI and HR series
Welcome back to another episode of Don’t Waste the Chaos. I’m your host, Kerri Roberts. I’ve been in HR for over 20 years, and we are in the middle of a multi-part series digging into AI and human resources: the policy, the why behind it, when you’re ready, how to implement it. And right now we’re on governance. So if I’m talking about policy, which I will several times in this episode, go back and listen to my episode on how to draft a policy, because that will help you.
Why Kerri’s in glasses this week
And also, did you recognize me? I have my glasses on, you guys, because I had something in my eye.
And I’m tough. I can ignore a lot of things. Pain doesn’t really bother me that much. So I thought I was ignoring this issue for a really long time. I was ignoring it for a month. And some days it would be more irritating than others. And I wear contacts every day. I have had glasses since I was before two, and I got contacts in the sixth grade. And I’ve just been ignoring this. And this weekend I could not blink with my contacts in. It was so irritating. And so I’ve had to wear my glasses.
I have since gone to my optometrist, and he has let me know that, first of all, there was something in my eye and we had to take it out today. That was awesome. And then second of all, that thing in my eye has cut my eye. And since I ignored it for so long, now we’ve got an issue. So I’ve got drops, I’ve got ointment to put on my eyeball, all kinds of stuff. We’re going to get it figured out, but there might be a few episodes with my glasses.
And here’s what I know. Probably next week I will not have my glasses on. I’m supposed to be wearing them for six weeks. And I’m talking about today. I had this doctor’s appointment and I recorded this on August 31st of 2026. We’ll see how long I last without my contacts. I’m not going to say I hate my glasses. I’m so grateful for my glasses, but I wear contacts morning, noon, and night. So we’ll see how long this lasts, and also be thinking about me. Help my little eye heal up, my little cut on my eye.
Okay, let me get back into it. I digress.
Killing the word “governance” before it scares you
AI governance sounds like something that would be found in a Fortune 500 company, and it should. It absolutely should. It’s got a compliance department attached, all of those things. But it doesn’t have to.
For a company of your size, governance looks like a few primary things. I’ve got five things that I want you to think through when it comes to AI governance at a small to mid-sized business. We’re going to get practical. We’re not going to overblow it here.
Without governance, you have shadow AI, which means people are using it and not telling you, or they’re using it and not admitting that that’s what their work is coming through. We don’t want to do that either. We need to put some governance in place. We need a one-page policy. We need a named human who owns the policy. It doesn’t just get filed away on your Google Drive. We need a short list of what AI can and cannot touch. And then we need a rhythm of who and when it’s going to be reviewed. And right now I’m going to say once a quarter. We’ll get more into what review rhythm should look like, but things are changing so very, very fast. It’s going to need to be more frequent than what I would say for, like, your handbook, for example.
If you haven’t listened to all of the episodes in this series, most of them are somewhere between 30 to 40 minutes long. This is going to help you know if you’re ready for AI at your organization, how you can use AI in human resources, what the policy could and should look like, and then we’re getting into governance. And then we’ll keep going. We’ll get into some really practical things like exactly how to use it in HR, when, why, how, what, all of those things. So that’s what we’re walking through in this series. I’m so glad you joined me.
And if you haven’t yet, hit subscribe on YouTube, Apple, Spotify, wherever you’re catching the show, so that way you can get notified. It’s not going to hurt you. Please subscribe if you get any value from this. And my hope is that you do.
So let’s talk about the five aspects of what I think you need when it comes to AI governance. And just a quick reminder, I’m not an attorney. I’m an HR pro. And so you probably should have your attorney review this. I’m going to get into some specific state law because there are some things out there that have come from an HR perspective when it comes to human resources.
But we want to kill the word governance before it scares you. Governance sounds like a boardroom to me. It sounds like a whole big committee of people. It sounds like a board. But that’s not what governance is. It’s not a 40-page framework. It’s something that we’re putting into place and then we’re checking in on it over and over again. That’s essentially what governance is. We’re going to have a policy, we’re going to have an owner, and then we’re going to have a rhythm in which we check in on it. That’s your governance.
So before you hear the word governance and you’re thinking, this is overblown, that’s really as simple as it is. Governance just means somebody decided, on purpose, what AI is allowed to do at your organization, who owns it, and how you’re going to check it. That’s the short of governance.
Only 49% of organizations have an AI policy at all
And the enterprise-level version doesn’t even fit your organization. They have different budgets, different tools, different levels of risk. So if you went out and copied Google’s AI governance right now, it wouldn’t even make any sense for your organization. We want to simplify it. We want it to be a one-pager.
I saw some data from SHRM, Society for Human Resource Management. It said only 49% of organizations have any policy at all when it comes to AI, on how to govern employees when it comes to AI. And just one in four of those companies that have a policy think that their policy is even helping them become ready. So 49% have a policy, but only one in four of the 49% think that that policy is actually helpful.
[Editor’s note: SHRM’s finding is that only about a quarter believe their policy is future-proof.]
So that’s what we’re working with right now. So let’s get ahead of the curve. Let’s get you ahead of the curve.
A policy is not governance if nobody owns it
So let’s talk about who owns it. A policy is not governance when it’s, like, a PDF. We write it and then we file it. Same thing with your handbook.
So many people say they’ve got a handbook somewhere and they never reference it. Can you memorize everything? Oh my gosh, when I worked in HR, I was pulling that handbook all the time. Somebody’s asking me about USERRA leave. Somebody’s asking me about bereavement. Somebody’s asking me about when it is that they qualify for the 401k. Somebody’s asking me about, do they have to give two weeks’ notice to be able to get their paid time off? And yes, over time you will remember all of those, but I bet you as the business owner, as the manager, as a leader, as an employee, you don’t know the answers to all of that. So rely on your handbook.
And the same thing goes when it comes to your AI governance. You’re going to rely on this policy. We’re going to recall it. Is this something that we can use? Is this a tool or system that we can use? Is this something that we can’t?
Here’s how the gap bites small companies. You write the policy, you save it to a drive, you call it done, but there’s no human behind it. And so we have to have a human behind it. Who are we going to ask questions? Can we add this technology? Who’s answering that? Can I put this project into ChatGPT, Claude, Manus, whatever you’re using, Gemini? Who updates the rules when the tools change? Who’s the name on the decision when AI touches something that actually matters?
Enterprises stack a whole function of people for this. You just need one person. Could be you, could be your office manager. Has to be one person, though, not a folder. The folder isn’t the owner.
I was looking at some data that was put out by Pacific AI. It said at small companies, only 9% are monitoring their AI for accuracy or for drift or for misuse. And only about a third have anyone that actually owns the AI governance. That blows my mind. We can’t have a policy for something that nobody owns.
The bereavement question: why policies need a human
That would be like saying, okay, so my step uncle passed away, but he’s not really my uncle anymore because it was uncle by marriage, and then my grandparents got a divorce, and it was step in the first place. So does that qualify for bereavement?
You can say, read the policy and figure it out yourself. But is that how you talk to your people? Gosh, I hope not. What you usually say is, let me think about that. And you take it to somebody in human resources, or you say, I’m going to have to ask HR about the details of that. And then somebody has to say yes or no. We don’t leave it on the employee to make that call. And even though there’s a policy, there’s still a human behind it.
I hope you’re catching my drift here. There has to be an ownership of your governance, of your AI policy. Somebody has to be saying grace over it.
The one-page policy and the named owner
Okay, there’s four things that actually are your governance. And so I want to walk through a checklist that you can actually build this month if you’d like to, to get this going. I’d like for you to build it today. Use the transcript from this episode and put it into AI and get this going.
You need a one-page usage policy. And we’ve talked about that, I’m linking that in the show notes. What AI is fine for, like drafting a job description or summarizing a policy or the first pass at meeting notes, and then what it’s flat-out not for. We’re not putting employee personal information in there. Maybe we’re not putting compensation data. Maybe we’re not putting discipline decisions or information around that. Nothing’s going into a free or public model. That’s what I would say. Plain English, one page. We’re not putting any of our company information into a free or a public model. So again, somebody needs to say grace over what system you’re actually using and making sure that it’s not a public model for consumption, that that information can be found out there.
The second thing is the named owner aspect. One human accountable for AI at your company. Their job isn’t going to be to know everything, but they’re going to be the person that people come to when questions need to get asked.
The do-not-feed-it list and the review rhythm
So, four aspects. You’ve got the policy, you’ve got the named owner. Next is the do-not-feed-it list. Exactly specific data that’s never going into public AI. We’re never going to put social security numbers. We’re never going to put health information. Maybe you decide you’re never going to put performance or discipline notes into it. Name it, so that way nobody has to guess. It doesn’t have to be the same everywhere. There’s going to be times where you can use AI. Like, I’m using AI, but what are you using it for? What are you not using it for? And what’s the best use of it?
So we’ve got the policy, we’ve got the owner, we’ve got the do-not-feed-it list, and then we need the review rhythm. Maybe every 30 days right now, because stuff’s moving so quickly. Maybe it’s every 30 days. At the most, making it every quarter. Governance cannot be a set-it-and-forget-it right now. The tools are moving way too fast for that. So think through how often you want to review it in your organization. Honestly, a 30-minute check once a quarter at a minimum is what you’re going to want to do.
So those are the four aspects of your governance. You have those four things, which aren’t really that complicated, you’ve got AI governance. Look at you, so fancy. Even as a small to mid-sized business, you can have AI governance. And you could, should, would, and let’s make it happen.
Compliance: why this is a finance issue
So let’s talk about the compliance aspect of this. This is a finance issue. Just like I always say, HR metrics are finance metrics. They are not all about fun and parties. They are really tying back to the bottom line. So this is where things can get expensive.
We want to make sure that we’re monitoring the workplace laws in our state. Not every state has laws right now that pertain to the workforce when it comes to AI.
The awareness gap in states that already regulate AI
I did see some data on how many HR professionals in states that already regulate workforce AI are even aware those rules exist, and how few have done anything about it. The gap is wide, and that makes me nervous.
[Editor’s note: the figures as stated in the recording were inverted. SHRM’s actual finding is that 57% of HR professionals in states with workforce-related AI regulations are NOT aware of those rules, and among those who are aware, only 12% have taken steps to ensure compliance.]
Missouri’s status as of August 2026
Now, I took some notes specifically. A lot of my listeners are from the state of Missouri. I practice in the state of Missouri. I have clients all over the US, but I am in Missouri. The majority of my HR career has been in Missouri.
So, real quick, for my Missouri folks: Missouri has no AI-specific law governing the hiring aspects or the workforce. As of now, it hasn’t enacted any comprehensive or employment-specific AI statute. In the 2026 legislative session, lawmakers floated over a dozen AI bills, but all of them died before the session ended. And the legislature won’t take it back up again until January of 2027. So right now, when it comes to hiring and the workforce, and I’m recording this August 31st, 2026, Missouri has not enacted any hiring or workforce AI laws.
Here’s what still applies in the state of Missouri and all other states. Don’t forget, you’ve still got existing anti-discrimination and employment law to look out for. That would be the Missouri Human Rights Act, plus federal Title VII, ADA, ADEA. Consumer protection, data breach rules, all of those still apply. So if your AI screening tool produces any kind of outcomes that touch those, an employer is still on the hook for those existing laws. It’s just now you’re using AI as a part of that, but there’s no AI-specific laws around it.
Illinois, New York City, and what’s coming in Colorado
States that do have specific AI laws right now that I’ve seen: Illinois and New York City both have specific mandates when it comes to either hiring or workforce when it comes to AI. So just keep that in mind if you’re operating in those states. Colorado has a replacement AI act on the books that takes effect in January of 2027.
I would do a quick search right now. Pause this episode and do a quick search if you’re an HR pro to make sure that you’re following those.
These are things that we need to be thinking about, because most of the time when a state picks something up, other states pick it up. Now let’s think about compensation data sharing. When we were talking, gosh, months and months ago, I was talking about sharing compensation ranges in job postings. Some states require that, some states don’t. I thought more states would be adopting that, and it hasn’t happened. Sometimes we get hot on the HR law stuff and then we get distracted and we move in other directions. So there’s a lot of states that haven’t picked that up.
[Editor’s note: California has no AI employment statute, but its FEHA automated-decision-system regulations took effect October 1, 2025 and cover recruitment, hiring, and promotion.]
An ungoverned AI situation is one that’s going to put you at risk. That’s the point that I’m trying to make. So we want to pay attention to compliance in this area. And again, be checking it regularly, because states are adding and subtracting things all of the time.
Keeping it human: what AI frees managers to do
The last thing I want to talk about is all of this being human-centered. A couple episodes ago I was talking about managers and how AI is coming for the middle manager. And the reality of it is, it’s coming for a portion of the middle manager’s job, the admin piece of it, but it’s certainly not coming for the whole job. And now middle managers need to get back to coaching and leading the work. And that’s, in my opinion, what I would want to be doing if I was a manager anyway. Who wants to just be clicking buttons and approving time off and that kind of stuff?
So to me, this is exciting if you really care about leading others. And that’s exactly what AI is freeing you up to do. And that’s the whole point of your project utilization, of your policies, of your governance. All of this, the point is to make things easier for the people, and to keep this human-centered. That’s the goal.
And this is what’s going to calm your teams down. If people are nervous at all about AI integration, and I’ve shared data in previous episodes just to let you know they are: fear of becoming obsolete, and techno-stress. That was the last episode. So obviously they are worried about AI. One, because of techno-stress: AI and tech is constantly changing. That’s exhausting. They can’t keep up and they don’t even know if they’re utilizing it correctly. And then fear of becoming obsolete. There’s a percentage of people who are afraid that they’re going to lose their jobs.
I was actually just listening to a podcast earlier today, and I thought this was really interesting, a little bit of a sidebar when it comes to AI. This guy was saying that because of AI taking over so many jobs by 2030, only four years away, and then 2040, even a larger percentage, he’s saying that we’re going to see a deflation, because it’s going to be easier to create products and services and humans will be needed less for them. And because of that, we’ll be able to see more in the marketplace, which will drive prices down. So something that might be a hundred thousand dollars might be thirty thousand dollars by 2040. I just thought that was a really interesting perspective. I hadn’t heard anyone say that. It’s been more around, what are we all going to be doing and stuff like that. So that was interesting to me.
Communicate the plan, and people feel 3x more prepared
Anyway, that was a sidebar, but the whole point is to keep this human-centered. What human makes the decisions about AI? What do you do as an employee in addition to the AI utilization?
I saw some data that said that employees are three times more likely to feel prepared to work with AI when leadership communicates the expectations. So, I mean, that feels like a no-brainer, right? But for some reason you and your team are not communicating about it right now, because you can’t make decisions about it, or that’s not your bailiwick, or you’re just not a tech person and so you’re not making any decisions. So your employees are feeling some type of way about that. They’re frustrated with you, they’re feeling inefficient, or they’re using it behind your back. There’s a number of things going on. And so you need to communicate about it. When you do communicate about it, employees feel three times more likely to feel prepared and to feel at ease and empowered about it.
Right now, only about a quarter of workers say that their company has done that for them.
[Editor’s note: Gallup’s 2025 figure was 22%; the Q2 2026 figure is 25%.]
Now, you know the satisfaction and engagement data. I talk about it all of the time. When we have got employees that don’t understand expectations, they are not satisfied and they’re not engaged. Employees that are not satisfied and not engaged are far less productive. Employees that are less productive are not positively contributing to the bottom line. And they’re also causing problems for the employees who are positively contributing to the bottom line. They’re dragging them down. That’s why they call it a bad apple.
So only about a quarter of workers are saying that organizations have prepared them and are communicating about AI. So we’ve got to do something about this. It is time. I think this is episode five in this series. Every week I just keep showing up and poking the bear, and I’m just going to keep doing that.
57% of workers have hidden their AI use
I saw this study that said 57% of workers have hidden their AI use or passed AI-generated work off as their own. KPMG put that out. 57% of your workers are hiding their AI use and passing AI-generated work off as their own. And they’re not talking about it because they’re afraid, because they don’t know if you’re okay with it.
Gosh, with my team, when I had a team that was a team before AI (now I have an AI team), I would be like, hey girl, you need to be using AI for this. Here’s how I’m using AI. Here’s what AI said about this.
My niece sent me a message the other day about a note that she got in her chart from her physician. And I took the information immediately and threw it into AI. And then I replied back to her and said, this is what my AI assistant said about this. These are the questions that you need to be asking in your appointment. What do we think? I didn’t act like I was an orthopedic surgeon. That’s weird.
But that’s kind of what we’re asking our employees to do if we don’t say anything about it, because our employees are like, I feel like I’m not supposed to be using it. So they’re hiding it. And then think about the way that makes you feel when you’re hiding work. It makes you feel like you don’t have integrity.
How to pick your AI owner this week
Let’s talk about how to implement this in your organization. So let’s say right now you’re like, okay, great, we do need AI governance, but I, the listener, the owner, the manager, the leader, whoever, I can’t own this. I’ve got too much on my plate, or I’m just not as equipped in this area as I should be.
Is there someone in your organization that you could assign to this, who you know is using AI, who is tech-savvy, who is forward-thinking in this way? Maybe you’ve got somebody in one of your departments who’s really into it and you could call them a super user and get them started down this path. It doesn’t have to be you, but at the end of the day you need to be brought up to speed, and you can’t ignore this forever. You just can’t. This is something that’s not going to go away.
AI can draft the policy for you. You have to say, yes, this makes sense inside of our culture. You decide what the policy has to protect. Ultimately, at the end of the day, AI can do the 80%. The human does the next 20%, which is the most important, because it’s the stopgap. It’s really saying, yes, this makes sense, no, it doesn’t, or no, you got that wrong because I didn’t tell you what technologies we’re utilizing. AI doesn’t know what state you’re operating in unless you tell it. AI doesn’t know your revenue unless you tell it. AI doesn’t know how many employees you’ve got unless you tell it. AI doesn’t know if you’ve got employees operating in multiple states, or clients who are ordering in multiple states, if you’re all online or if you’re Main Street, or what your situation is. You have to feed all of that in there. Just talk to it, walk through it, have it start. If you don’t know where to start, have it start for you, and then you’ve got something to react to.
Your action item and what’s coming next week
So this week, this is what I’m challenging you to do. Name the person who’s going to own AI at your company. Figure out who that is. Just decide who it is and tell them. Or maybe ask. I wouldn’t just throw it out there to everybody and anybody, because this is going to take up some of their time. So you need to think about that. And you need to think about someone who you’re going to meet with on a regular basis to get debriefs from. They’re going to need to be asking you questions. They can’t just run with it. They have to have some level of authority. So think through that.
The single move is to have one person own this and move forward. That’s 80% of the governance plan right there, because the rest of it can be drafted by AI. So let’s get it going. You can knock this out before lunch tomorrow, or lunch today.
Next week, we’re getting into something that governance keeps bumping into, and that’s your people’s jobs that are shifting faster than your org chart can keep up. We’re talking about skills over roles, and how to plan your workforce when the job description is not sitting still. That is what we’re talking about next week.
So, folks, I know that the term AI governance sounds scary. I know drafting an AI policy when you don’t even know what role you want AI to have in your organization seems scary. But the data suggests largely that your employees need it. They’re using it anyway, they’re hiding it, and it’s having a negative impact on your business, not to mention the silent risk that’s sitting out there.
So it’s time to take the bull by the horns and get something going in this area. It doesn’t have to be perfect, but let’s get something going. I know it can feel like chaos, but the work is worth it. So don’t waste the chaos. Embrace it. I’ll see you next week.
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