When starting up a business, spending money on HR initiatives and policies can easily slip to the bottom of the to-do list. The general focus is to drive immediate returns, and so it can take time to see a real return on investment of HR. As a result, HR is being thrown in the mix with ‘business admin’ and is reduced to a mere box-ticking exercise.
In place of an effective HR strategy, small business owners frequently try to encourage friendly and informal relationships, working under the implied promise of trust and casual compliance with ‘this is the way that we do things around here’.
Many of the start-ups that began life this way, in a burst of enthusiasm, optimism and sheer hard graft, do not make it past their fifth birthday. Unfortunately, relying on their inherently goal-orientated and collaborative start-up culture to support people management requirements is not an effective plan for growth and longevity.
Small businesses need to strike the balance between managing ground-breaking innovation and challenging the status quo, with ensuring that they have streamlined processes in place that pave the way for long lasting growth. HR is not there to squash these cultural ideals, it’s there to form the foundations on which a successful business can grow and thrive.
So why should small businesses invest their time and money in HR from the beginning and ensure they get a return on their investment? Here are four reasons why small businesses should invest in HR.
1. HR adds value
Small businesses see little, if any, distinction between the strategic and transactional elements of HR. As a result, it is systematically undervalued and under resourced. And yet there is plenty of evidence to show that strategic HR delivers real dividends – especially among disruptive companies that are challenging the status quo. Netflix is a good example of fresh thinking about people management and how centralising and prioritising the employee experience can deliver exceptional results. This innovative culture has been a key factor in the company’s success.
2. Small businesses are leaving themselves vulnerable
With their relaxed attitude to people management, small businesses are leaving themselves exposed to claims that they may struggle to defend in an Employment Tribunal. By investing in HR and developing policies and best practice they will have a fundamental framework to fall back on.
Employee handbooks are essential in today’s workplace as they help set out core Company expectations in terms of general conduct and integral UK policies and employment legislation, take a look at HR Revolution’s employee handbook template designed to cover everything your business requires to remain compliant.
3. It will come back to haunt you if you don’t
The value of HR is often downplayed in the early stages of a business and this can come back bite them, just look at Uber. And they are not alone. There has been no shortage of news stories revealing issues within larger businesses that could have been avoided if even the most basic of HR procedure was in place. Unfortunately, these companies thought about it too late and it rebounded back on them ten fold because by this time they are no longer a small start-up.
4. Managing HR admin is a misuse of individuals’ skillsets
As a small business, you probably don’t have a dedicated HR person – this is typically because at this early stage, survival is the biggest business priority. As a result, the management of HR administration such as approving holidays, managing sickness, and approving expenses, is landing in the laps of busy senior employees by default.
According to recent research, CEOs of small businesses are spending, on average, eight hours a week on all HR-related tasks. That’s more than office or operations managers who spend seven hours a week and might more realistically be expected to spend time on administrative activity. To put that into perspective, the median average cost of CEO time spent on HR equates to £18,700 each year and is an absolute misuse of individuals’ skillsets.
This is where HR Revolution can help you save valuable time and money by automating your all consuming HR tasks… with breatheHR, an online HR information system starting from as little as £9 per month.
It has been shown that dedicated HR software saves small businesses, on average, four hours a week on HR admin with the use of software that can assist you with your day-to-day tasks. Take a look at breatheHR below and manage your people, not paper!!
It’s no longer acceptable for small businesses to allow HR due process to fall by the wayside, prioritising new business over their people management. In the current business economy, where 40% of businesses fail within the first five years, enthusiastic entrepreneurs need to change their tact. Whilst your investments may not bring about immediate returns, your return on investment will be clear when your trained, supported and rewarded employees grow with you.
HR Revolution; supporting you, your employees AND your business.
A version of this blog first appeared on breathehr.com