Does Your Small Business Really Need HR?

Does Your Small Business Really Need HR?


There comes a time, when a small business starts to grow, that the business leaders must surely ponder the question of HR and if it is really necessary.  If senior management is confident that they have the time and expertise to provide their business with the following HR essentials and useful basics then the answer is probably ‘no’, at least for now.  If not, and the business really wants to engage and motivate their employees as well as protect themselves from employment law risk, then it is probably time to bring on board some good quality HR support.

HR Basics that Every Small Business Should Have:

  1. Job specifications and a clear organisation structure (who does what and who reports to whom).  They may not be legal requirements, but ensuring that you have identified exactly the kind of roles and experience that you need to support and grow your business before you recruit will help you to avoid expensive recruitment mistakes and ensure that business success is much more likely.  Once you have your employees on board, keeping job specs and individual work objectives up to date will make sure everyone is focused on the right things.  A clear organisation structure will help everyone to see exactly who is responsible for what and to whom each individual should go for line management support.
  2. Contracts of Employment.  A contract of employment is an agreement between an employer and employee and is the basis of the employment relationship – which is why it is much better to have it set out and agreed in writing.  A contract does not have to be in writing to be legally valid (although most employees are entitled legally to a basic Statement of Particulars).  However, a written contract provides peace of mind to both the employer and the employee and absolute clarity on important terms and conditions of employment from the off-set.  By having detailed contracts of employment in place for all employees, as well as fixed term contracts for temporary employees and service provisions for contractors, you are immediately reducing your employment law risk and operating good HR practice.
  3. Basic set of HR policies – Employee Handbook.  HR policies and procedures can cover all manner of work related issues.  Holiday, absence, different types of leave, flexible working, grievance and disciplinary procedures, confidentiality, Health & Safety, notice periods and redundancy are just a few examples of policies that might be required by all businesses at some point (some all the time).  Although it is good practice to include the most important and commonly occurring of these policies and procedures within the Contract of Employment, to avoid it becoming a huge document many companies put all of their HR policies and procedures into an Employee Handbook – which forms a part of an employee’s terms and conditions.  It makes sense to think about and develop your policies carefully, rather than make them up on the hoof when the need suddenly arises (eg a maternity policy if an employee announces their pregnancy), as it is not always easy to amend or change HR policies once they are in place.  Having all of your policies and procedures in one, easy to access Handbook also means that everyone is clear on how things work.
  4. Well trained managers who can motivate and develop employees.  Obviously there is no legal requirement to train your managers. However, the vast majority of employee relations and employment law issues, good people leaving, poor productivity, low morale and poor communication are down to managers managing badly.  In my experience, very few people managers in small businesses (and often large corporates too!) have had any management training before they are expected to manage other people.  Having good people managers responsible for recruiting, developing, supporting and managing their direct reports will make a huge difference to the success of the business.  As such, all businesses should see the professional development of their managers and leaders as essential investment.  It’s likely to be the most impactful ‘HR’ activity that your business can engage in – often making or, if ignored, breaking your success.

What kind of HR support do you need?

In terms of the kind of HR support your business needs, it really does depend on the nature and size of the business. However, for most businesses with fewer than 40- 50 employees it is not necessary to install an in-house HR department, and outsourcing your HR requirements to a consultant or an agency will suffice.  You can opt for minimal HR support, such as a consultant or agency that provides telephone and email support on a needs must basis, and perhaps the provision of some basic documentation, such as Contracts of Employment.  Alternatively, you may feel that the higher costs (although they are significantly cheaper than an employment lawyer) of an HR Consultant are a worthwhile investment for you business.  A good HR consultant should really get to know and understand your business, perhaps spend regular time in your offices and certainly provide HR solutions that are tailored specifically to meet the needs of your business.  A good HR Consultant will add value through helping you to attract, develop and retain the right employees for your business and give you peace of mind that you are not going to fall foul of employment law.


If you would like some help to identify the kind of HR support that your business needs and can afford, please do feel free to contact for a free, initial consultation.



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