How to get HR right for an entrepreneurial small business.

Traditional HR does not work

HR has always been the underdog. A place where employees went to complain with a nice cup of tea and tissues on hand. Business owners have always been weary and only sought counsel if things went horribly wrong. HR swooped in, armed with legislative guidance, best practice notes and an employee handbook! They rarely brought anything commercial to the table.

Professionals have traditionally risen up the ranks from HR Administrator to Head of HR without any commercial experience. The UK’s HR governing body, CIPD offers professional roadmaps and competencies for a “commercial HR practitioner” but does not address the gap in the biggest competency needed to be a brilliant HR specialist - solid business acumen. 

In an attempt to salvage the reputation of a function which worked almost in opposition to business, the HR Business Partner model was born. Essentially, the model works on the premise that HR should be aligned with business leaders influencing business strategy. It is primarily a model which works in corporate organisations where stakeholder management and political management is required.

How can HR add value to a small business?

Take away the corporate behemoths, where does that leave small to medium businesses? What does good HR look like? How can it add value? More crucially, is it even required?

In small, rapidly growing businesses, there are no nameless employees on a spreadsheet. Everyone generally knows each other and you can make a decision by getting everyone in a meeting room. 

Entrepreneurial and technology businesses provide a unique HR challenge - extremely well educated and talented people in comparatively small businesses. People tend to be ambitious and want to see how they are being invested in for the future. They are less loyal than other more traditional firms and tend to be more flexible in terms of career development and growth.!

Loyalty is often a challenge with a recent report citing that 76% of full-time workers, while not actively looking for a new job, would leave their current workplace if the right opportunity came along. Other studies show that each year, the average company loses anywhere from 20% to 50% of its employee base. 

Here a few ways HR can actually add value: 

  • Helping to keep employee relations healthy - offering commercial advice to nip issues in the bud. Growth challenges the status quo and can lead to all sorts of people issues. Good, pragmatic HR should address this by being proactive.
  • Designing and streamlining HR processes so time is spent on value-added activities. Nothing like clunky processes to get in the way of growth and quick decision-making. HR processes should be simple and straightforward in a small business.
  • Designing systems that work e.g. great performance reviews, effective HR technology and incentive schemes that suit small businesses. When time is money and every individual contribution counts, there is no time for outdated performance review procedures that take ages or incentive schemes that don't really motivate people. 
  • Identifying skills and capability needed to grow the business in the future and developing these through blended learning approaches.  This crucial. In order to keep competitive, skills and development need to be future focussed so you have what it takes to grow. 
  • Gearing for growth by proactively building a network of suitable talent and supporting the business with retaining and developing star performers. HR should support this but this is not their remit only. EVERYONE needs to be involved in building and nurturing relationships with great people who could help the business. 
  • Actively managing talent by getting under the skin of employees - how engaged are they? What are the pain-points? 
  • Supporting business change through well designed communication plans. Change is constant. Poor communication, or worse, no communication can be detrimental to morale.
  • Help to make your business attractive to talented people. This can be through creative recruitment campaigns and meet ups to name a few.
  • Helping those new to management by giving them the tools and support they need to really get the best out of people. 
  • Help to develop leadership capability.

Finally

 Everyone approaches HR differently and one size does not fit all. The strategy of your business plays a significant role in what you need from HR. It's important though, to work with someone who thinks differently and brings a commercial perspective.  Whether it’s growth, international expansion, downsizing, the shape of HR needs to reflect your plans.