Small business owners typically handle HR themselves for several years without any issues. The number of employees is not too large, the atmosphere is friendly and cooperative, and the owner knows everybody personally. That’s basically all that is needed at the first stage.
Then the team suddenly doubles. A new manager gets hired, and the informal approach that used to work in the past now only creates problems. All of this is a sign that the company urgently needs proper HR management services.
This is the point where a lot of businesses realise they’ve been managing people rather than managing HR, and the difference matters more than it sounds. Below we look at where the problems appear as the company grows, what HR processes are better to implement in advance to avoid expenses later on, and in what cases it is advisable to hire small business HR specialists instead of trying to cope with everything on your own.
Reasons why business growth uncovers gaps that had not been a problem before
The fewer people you have, the less obvious the inconsistencies will be. For example, two employees’ disciplinary processes will be slightly different; there will be no official system for keeping records of absence, or the employment contract will not be reviewed for years, as everybody will trust the owner to solve all sorts of situations fairly.
However, as soon as the number of employees increases, you open a new site, or the managers start making independent decisions; all of these will become serious risks for you.
Employment tribunals and regulators alike look for one thing above almost everything else: whether people in similar situations were treated the same way. If you, as a business owner, were not able to prove that you had best intentions, you will be more at risk.
Contracts and policies that will withstand any test
Usually employment contracts are written once, then left in some file, and never reviewed again. The problem is that pay rates, statutory entitlements and even standard clauses change quite often, so a contract that was compliant three years ago may not be compliant now. This applies to the handbooks and workplace policies as well. If you have any of these documents, they’re often generic templates that have not been modified or adapted to how the business actually runs.
HR management is basically a short and not very glamorous list of the following items: contract audit according to current entitlements, putting absence, disciplinary and grievance policies in written form (instead of doing that verbally), training managers to handle certain situations in the same way irrespective of who they are dealing with, and periodic review of the internal processes according to the current legislation in the UK.
It is particularly important to make sure that your disciplinary and grievance procedures comply with the ACAS code of practice since failing to do so may lead to additional problems in case of a lawsuit even if your initial decision was perfectly reasonable.
Absence and performance management in a consistent way
Absence management is one of those areas that seems simple until a pattern needs to be addressed. Without a clear process in place, decisions about what counts as an issue, how it’s raised, and what happens next end up depending on the managers, which is exactly the kind of inconsistency that creates problems later.
The same applies to the performance management as well. When the discussion is not documented at the moment it occurs, it will be quite difficult to defend your position in a month or two in case a dispute arises.
The documentation process does not have to be official or complicated in any way; one page of notes at the moment of the conversation is enough. However, it has to be a habit rather than a measure taken when something goes wrong.
Small business HR services in practice
All of the above-listed processes do not require the creation of the entire HR department, and the vast majority of small businesses can’t afford to hire full-time HR personnel.
Outsourcing HR services for small businesses is based on the idea of splitting the cost of professional consultation and the cost of a full-time salary.
Instead of creating a certain HR function inside the organisation, the owners can use contract review services, policy development, and consultations before disciplinary meetings, all paid in accordance with the amount of support the business needs rather than provided as one package.
These are exactly the gaps that small business HR services at Avensure and similar providers are built to fill, giving owners access to the same level of expertise that a larger company would have in-house, without the cost of hiring for it directly. In many cases, that’s a far more practical solution than trying to develop the HR function from scratch.
Small business HR services: quick answers for growing companies
What do small business HR services actually cover?
Typically, contract and handbook reviews, advice on absence and performance management, assistance in disciplinary and grievance procedures according to ACAS code of practice, and a point of contact for everyday questions related to the employment law, scaled to how much support is needed by the business rather than offered as one package.
Does a small business need an in-house HR department?
No, not usually, at least not yet. Much more important is the accuracy and consistency of the contracts, policies, and record-keeping. All of these are achieved by many small employers through the outsourced HR services rather than hiring somebody internally.
When should a growing business consider HR outsourcing?
Some common triggers are hiring a manager who is not the owner, opening a second site, or discovering that similar situations are handled in different ways by different managers – all of these are the signs that an informal management starts bringing certain risks from the perspective of the UK employment law.
How do outsourced small business HR services compare to hiring an HR manager?
These services are significantly cheaper for a small team, since support is often priced as pay-as-you-go advice or project work rather than a full-time salary, while still giving access to the same depth of expertise.
