Do small businesses need human resources (HR)?

Running a small business is not easy thing, as there are always a hundred and one different problems to think about. You have to secure the right people for each position and promote your company, while make sure there is enough cash flow to stay afloat. At the same time as worrying about all that, you also have to grow your business so that it becomes more sustainable and profitable.

Therefore it is not surprising that some small business owners have human resources (HR) low on their list of priorities. But is HR something that will benefit a small firm? And if so, how can you incorporate it into your budget?

Do small businesses need HR?

First of all, let us be clear: a small business is not legally required to have an HR team. So it is not needed in the strictest sense of the word, but there are several functions that HR performs that are essential to the smooth running of a business:

• Administering payroll and benefits
• Staff recruitment and retention
• Overseeing training and professional development
• Handling legal compliance matter
• Developing a healthy workplace culture
• Monitoring and reviewing employee performance

Therefore it is something that a small business will need if the goal is long-term growth and success. Here are some of the main reasons why small firms need it.

Legal compliance

The world of employment law is an extremely complex one. This is not helped by the fact that the legal demands on companies in the UK can change all the time. The significant changes that the Employment Rights Bill will lead to are just the latest example of this. Trying to ensure your company remains compliant in all respects will be a major undertaking without an HR team that is trained in legal matters. It involves everything from the inclusion policies mandated by the Equality Act, to writing out employee contracts and conducting right-to-work checks.

Talent management

If you want your small company to succeed, you must hang on to your most talented employees. This requires careful management, so that they feel their ambitions are being met and there is a route to career progression. Employee relations is a part of HR, so it will assist you with that. HR will conduct performance reviews to identify the most effective performers. It will also set up opportunities for advanced training and promotions.

Employee engagement

There is a lot of data showing that engaged employees are more productive, but achieving engagement requires a culture of open communication. Employees need to feel they can raise issues and be listened to and taken seriously. HR professionals are trained to deal with employee grievances and problems. Without their help, it is more likely that employees will bottle things up and become disillusioned.

Scalability

The absence of HR will make it harder to grow your business at a sustainable scale. This is because HR develops the processes – including drafting policies and conducting interviews – that enable companies to take on more people without confusion and loss of direction. HR will also handle the increased admin as the business grows, which lets leaders stay focused on their core tasks.

Strategic support

All the various functions that a trained team of HR professionals will perform can be described as strategic support. From dealing with routine admin to managing employee relations, it is about helping your company to grow while avoiding costly errors.

How small businesses can implement HR

Now it is time to look at the two options for implementation.

Hire an in-house team

This has the advantage of convenience, but a couple of big disadvantages for small firms. One, it will mean significant extra costs in salaries and benefits. Two, the depth and range of expertise is likely to be lower.

Outsource

Option two is to outsource your HR to a consultancy. This lets small firms pay for a package that meets their needs and budget while avoiding salary and benefit costs. Outsourced consultancies offer expertise in all areas of HR and access to cutting-edge technology too. You could invest in HR software, but different programmes are needed for the various functions. That will raise the cost considerably for your company. You will also lose out on the crucial human element.

For top quality HR services in Bedfordshire, contact FiveRivers Consulting right away.