Running a small business is hard work. At the start, founders often find themselves wearing too many hats as they juggle countless different tasks alongside their own responsibilities.
Can you honestly say you enjoyed taking on every role that needed attention in those early days – sales, marketing, accounting, recruitment, call screening, fixing computers or unblocking the office drains!
As the business starts to grow and more staff are taken on to fill priority roles, it’s likely there’ll still be gaps in ‘softer’ areas of the business due to resource constraints. Rome wasn’t built in a day.
However, once you’ve got more than a handful of employees, you do need some way to manage your HR responsibilities: if people issues are always being escalated to the top, this inevitably takes too much time away from the owner who needs to focus on leading the business forward.
It can be a real challenge for SMEs to just keep up with the basics - holiday and absence management, hiring the right people, ensuring the business is compliant with current employment law – and organisations without a dedicated HR function are leaving themselves at risk, potentially compromising efficiency, accuracy and growth.
The sweet spot comes when a business reaches a headcount of between 15-20 staff. After that, you’re playing Russian Roulette if you don’t put adequate people processes in place.
Personal Reflection
There’s more than one way to bake a cake so, before you crack open the eggs, ask yourself the following questions:
- What people challenges are your company facing?
- What is the purpose of HR in your organisation?
- Do you think HR can help you grow the bottom line?
Before considering how best to manage your HR, let’s look at the most common risk factors that can affect SME performance and growth.
Risk Points
Without a shadow of a doubt, every business wants to avoid risky employment issues such as grievances, disciplinary and tribunals, so staying compliant with current HR law is a must.
Despite some uncertainties about exact details and dates, the new government has signalled that it wants to bring in more than
60 significant employment law changes following the introduction of the Employment Rights Bill. We’re expecting this to be tabled in the early autumn, so employers will need to be fully on top of changes in legislation and regulation.
Getting on the wrong side of these matters can be time consuming, complicated, exhausting and undermine your brand reputation. The British Chamber of Commerce calculates the average tribunal cost at around £8,500, and other expenses can quickly add up.
Did You Know…
- On average, a basic unfair dismissal case may take around 12 months to complete, with a more complex discrimination matter taking around 18-24 months.
- If an unfair dismissal claim is successful, you could be paying the basic maximum award of £16,320.
- Compensatory awards have a ceiling of either £89,493 or 52 weeks’ wages, whichever is lower.
- There is no maximum amount for discrimination claims.
Accurate Data
Data is the driving force of any modern organisation. Even a small business can produce significant amounts of data in their daily operations and there are significant consequences if that information is not correct and up to date.
SMEs can obtain invaluable workforce insight from their people data, which can also be used to protect the business and provide evidence that you’re doing things the right way.
Keeping accurate and relevant data helps you understand your business better by tracking progress against set goals. It allows staff to focus their efforts more efficiently and enables managers to make better decisions. Mistakes are simpler to isolate and correct before they become an issue, consolidating employee and customer trust in the brand.
If you’re one of the 5.6 million small businesses in the UK, you’re going to be swimming in workforce-related information despite employing less than 50 people. It’s a lot to deal with and can be a nightmare to keep up.
You’ll need to amend personal details when staff get married, divorced, move house, change their bank details. Then there’s employment contracts, employment details and history, records of work-related accidents, training documents to sign…the list goes on.
Not only do you have to find a reliable way to record, manage and update all this information, but it also needs to be stored safely. Certain information is deemed ‘sensitive’, such as health and medical conditions, and must be kept more securely.
Being able to easily find and track employee data is essential while still ensuring that it’s only accessible to those who need to see it.
When it comes to handling personal data, another risk factor that impacts every aspect of a business is GDPR.
SME Today reports new research that shows UK SMEs are risking fines up to £17.5 million for serious breaches of GDPR principles, with 18% of organisations finding it hard to understand ICO regulatory guidance.
Recruitment Challenges
Recruitment, retention, turnover and skills is another vital area to get right so you can source and retain the right candidates to meet your business needs.
Getting hiring decisions wrong, for instance, costs money and can be hard to unpick. It goes without saying that you want staff to be productive and engaged, but that requires having a supportive and nurturing company culture in place so that new hires can be effective from the start.
Once new recruits have settled in, have you got a longer term plan to support their ongoing training, development and progression?
And if it doesn’t work out… you need to respect the relevant employment laws, follow any company mandates, make sure you’re using the right documentation and treat the employee with fairness and respect.
You’ve also got to work out how much they’re due to be paid before they leave, including accrued holiday pay and wages, or pay in lieu of notice.
You’ll want to create a staffing strategy that looks ahead, to make sure you’ve got the right people in the right positions at the right time.
Headcount planning allows you to identify where gaps are and if any areas are being replicated unnecessarily. It’s all about forecasting your future needs and managing budgets, so that you can plan recruitment and training before your busiest periods and accommodate demand where and when it’s needed.
Holiday and leave needs to be managed so that the company isn’t left short staffed during peak times. Assessing holiday requests can be tricky: working parents may always want to take holidays at the height of the season, or there could be multiple requests for the same period. All staff need to be treated fairly and not feel that others are being given priority, so clear policies and visibility need to be put into practice.
Protecting Your Business
Staff absence is undoubtedly one of the most challenging aspects of running a business and something that needs to be managed efficiently.
Knowing exactly how many days an employee has been absent in any given period means you’re aware of potential work-related difficulties they’re facing and gives you an authoritative audit trail to look back on if disciplinary action needs to be considered.
Although large employers report much higher absence rates than smaller ones, average levels have risen considerably from 5.8 days in 2019 when the last comparable survey was conducted.
Sickness absence is never a problem until it is, and a short absence can quickly become something more prolonged. After 4 weeks an absence is usually classed as long term and by this point the situation may already have become critical in terms of the impact to your organisation.
With so many potential reasons for employee absence, including bereavement and maternity leave, you’ll need to know exactly whether the leave is authorised, unplanned but legitimate, or unauthorised. Has the staff member self-certified or do they need to provide medical evidence; will they eligible for Statutory Sick Pay or entitled to something else?
Making a smooth and successful return to work will require both administrative input and practical support.
Return to Work interviews are an excellent way to facilitate this and can help everyone get a fuller understanding of the absence and decide if any workplace adjustments are needed, such as a phased return, a possible change of hours or working pattern, or a period of working from home.
Team Culture
A strong company culture can make all the difference and strong leadership plays a central part in creating and modelling good workplace culture. Employers set the tone, ensuring it starts from the top and filters down.
A quick health checklist includes:
- Good communication at all levels – open dialogue and feedback.
- Putting in place employee development, recognition and support strategies.
- Encouraging staff to achieve a good work life balance.
Without the right foundations in place, however, things can easily slip. When a business is disorganised, even when confined to certain departments or individual staff, it’s likely to have a corrosive effect on wellbeing and increase workplace stress.
Low key situations such as one individual’s lack of attention to detail may start to be seen as acceptable by others in the team, resulting in a general reduction in performance and quality of work.
Managers play a vital role in spotting what’s happening, assessing the situation and taking a proactive but positive approach to get teams back on track - but this can’t be done effectively without having proper rules, practices and procedures in place.
Do it Early - or Do it Now
Putting the building blocks in place and creating a strategic people approach early on in your organisation’s growth makes clear business sense and creates more resilience. However talented the individual, teams only work at their best when there’s a cohesive structure in place so that everyone understands basic protocols such as reporting and accountability.
It's also worth considering that what’s worked in the past may no longer be effective. In the early years, it’s inevitable that HR operations will be about getting the basics in place and no more, because your focus is on recruiting core staff, balancing the books and ensuring the business survives.
As the company gets onto a more secure footing, able to grow and expand to take on a higher headcount, these changing needs will drive your people practices forward.
Once you know you need more HR support, it’s time to decide whether you want to employ a trained HR professional to work inhouse, automate your HR by subscribing to a trusted HR software provider, or buy in the services of an HR consultant.
Considering Employing Dedicated HR Staff?
Decide what your priorities are so that you can make sure your expectations align at the point of recruiting. If you’re not on the same page, don’t share a realistic timeframe or have the right structures in place to deal with certain scenarios, it becomes harder to create a coherent people management approach and things could unravel quickly.
No Solution is Right or Wrong
Each one has different cost and commitment implications so it’s important to think carefully about the best fit for your organisation.
Doing your research is crucial so you have all the information to hand and can see exactly what your options are. As a great starting point, read our
definitive guide to Software as a Service (SaaS) for SMEs.
As well as core features such as the Holiday Planner, Absence Tracker, and Timesheets & Attendance, we also offer a wide range of valuable services that mean you won’t need to spend out elsewhere. Including:
✔️ Digital signing
✔️ Expense Management
✔️ Applicant Tracking
✔️ Compliant HR document library
✔️ HR Digital Files
✔️New Employee Onboarding
Can HR Can Help Grow Your Bottom Line?
And if you were wondering about the question we posed earlier on…read
here about how innovative HR software can help grow your bottom line.
WorkSmarter HR Partners
This is another great way for SMEs to get simple solutions to workplace issues, along with bespoke advice and guidance. Strategic insights and tailored support are provided through WorkSmarter’s intuitive and streamlined platform.
With flexible options based on your own requirements, you’ll have an expert and experienced HR consultant in your corner to help you navigate and manage your HR and employment concerns.
Get in touch to find out more.
