Four reasons why HR matters to small businesses

Sharon Fishburne
Managing Director and Owner
Sharon Fishburne Consultancy
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Thousands of small businesses and startups don’t have any form of HR support. But the UK faces an unprecedented talent crunch, huge business uncertainty and stagnant productivity, so now is not the time for young businesses to skimp on professional HR support.

Here are four key reasons why you need HR experts, according to some of the industry's leading lights.

1. Culture

Company and workplace culture matters. And a good culture is not just a fluffy, ‘nice to have’. It affects your bottom line. According to a US study undertaken in 2015, more than 50% of CEOs and CROs said that corporate culture influences productivity, creativity, profitability, firm value and growth rates.

For small businesses, culture is just as important, and it takes time, skill and effort to get it right. CEO of Saberr, Tom Marsden, agrees: “Organisations that are smaller still need to care about their people and culture. Culture needs to be managed with the same focus as business development. It’s wise not to underestimate the effort required.”

You can’t create a great company culture without solid, experienced HR support. HR professionals operate like lifeguards, ensuring that everyone is swimming within the boundaries and in the direction. And if people get into trouble, they’re there to pull them back to safe water.   

2. Productivity

A good company culture is just part of the equation. There’s no doubt that, as Lindsay Barnett, MD of hr.byhoxby says: “A happy, fulfilled workforce is a productive workforce”. Productivity is perennially poor in the UK and if small businesses don’t want to contribute to this gloomy set of figures they need HR support.

Today, small businesses are lucky to have a whole host of tech tools to help with the basic HR functions. Alongside hiring a part-time HR consultant, referral marketing platform Mention Me use the full range. Andy Cockburn, CEO, explains: “We automate everything that we can. We use Charlie HR to manage employee records and holiday booking; Motivii to track everyone's motivation level. We use Perdoo to track company and individual goals and Lattice for the review process. All of these tools significantly reduce the amount of manual work we need to do in HR.”

Tech tools go a long way towards improving productivity, and training also plays a big part: “Training boosts efficiency, and it’s no secret that happy staff will be more productive,” says Paul Drew, Managing Director DPG. But when it comes to the soft skills, only a human being will do. This is due, in part, to the Hawthorne Effect. Productivity is affected positively when workers know that there is someone there whose job it is to care about their welfare at work.    

3. Risks

Without professional HR, small businesses can be putting themselves at risk when it comes to employment rights. And the danger starts the moment a new employee walks through the door: “Not following any aspect of the employment law framework brings obvious risks and depending on the infringement, employees can bring claims against their employer. The fees for employment tribunals were scrapped in July 2017 – since then there has been a 90% increase of claims,” says Martine Robins, Director of The HR Dept Woking

HR professionals are much more than a function to ensure regulatory compliance – they can help you avoid employment tribunals in the first place; they are a long-term insurance policy. Employers lose cases at tribunal level because they didn’t follow proper statutory procedures. They failed on the HR front. And failure costs not just time and money, but it affects your brand reputation too. 

Risks come in all shapes and sizes for small businesses and startups, but one of the biggest risks in a lack of time and skills. HR can help. “Small business owners cannot be experts in everything so engaging HR support means that [they] can focus on what is important – growing their business,” says Robins.

4. Costs

Yes, HR support is an outlay for your business. One, you will argue, that you just cannot afford – even part time or on retainer. But I believe no business can afford to be without HR support. And these cost savings don’t just stem from avoiding tribunals and other crises.   

“There are significant cost savings to be achieved through good HR practices. [..] having the right recruitment processes in place – freeing up managers to get on with the day job, and also getting talent on board quickly enough to support growth and demand,” says Paul Drew, Managing Director of DPG.

The bottom line is that HR can save you money. HR creates and implements efficient hiring and retention strategies and bespoke benefit packages. But most of all, the very best HR support can help you avoid the pitfalls as you grow, such as job role duplication between teams, and looming unfilled skills gaps.

The role of HR has changed over the last five years. Gone are the days when HR just wrote job ads and stepped in when an employee was performing poorly. Today, HR takes the broad view, looking into every element of your business and creating strategies that help your grow effectively, quickly and safely. Next time you think you don’t have the money for HR support, ask yourself why?

About Sharon Fishburne

Sharon Fishburne

A columnist and marketing expert, I previously worked at number of the biggest global consultancies, including PwC, advising multinationals on their expansion strategy. I saw the value that smaller local businesses could take from the process too.

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