The Importance Of HR In SMEs

The Human Resource department in any business is the glue that holds everything together — but sometimes, small and medium-sized enterprises (SMEs) forego establishing one for themselves. This could be due to budget constraints and deprioritization in favor of expanding and growing the business. They could also feel that the team, at that point in time, is too small for an elaborate HR system, relying instead on managing HR activities informally.

If you’re currently working on an SME, issues like these are unavoidable, especially when businesses are just starting out. However, it is advisable to build an HR system as early as possible so that various people-related practices such as talent management, engagement, compensation policies and benefits can be laid out.

What can you expect an HR department to bring to your company? If you don’t really believe you need one as of now, below are the three main benefits they could bring to the table — aspects of your organization that could really be worth investing in.

First off, an HR department would help push for better performance. This is crucial in SMEs, where consistently peak performance determines the longevity of the business. However, lackluster performance is all too easily let go in these situations because managers could either be too busy directing the company or are simply not equipped to handle these kinds of conversations. If the poor performance is left unattended, it will soon begin to affect the rest of the team. Their colleagues will resent seeing them not pull their own weight, and may think that they can get away with letting their own performance slip as well.

Having an established HR would help you relate to your employees better, monitor their performance, and provide support and development where it is needed. This will allow you to better understand the strengths and weaknesses of your team. It is easier to spot people who may be struggling or to pre-emptively act towards solving any problems when there’s a department dedicated to doing this.

They would help maintain a lively SME culture. SMEs usually have an energetic, enthusiastic, and fast-moving culture. Once the business goes beyond the start-up phase and starts to grow, however, they quickly outgrow the ‘entrepreneurial’ feel as well. The owner may not be as visible or as present as he or she previously was, and a disconnect from the leadership team could mean that the employees will feel less valued, less involved in what is going on.

Investing in social platforms that come with some of the latest-generation HR software can help with keeping everyone informed, involved, and engaged. It can act as the central platform where managers keep their people up-to-date, share success stories, and welcome employee input.

Lastly, a dedicated HR department could manage talent better. It’s tough to recruit with today’s job market — SMEs constantly find themselves pitted against established organizations in finding qualified candidates, providing competitive salaries, and keeping a solid branding. They will also have to worry about each and every employees’ training and development throughout the organization’s ups and downs.

Having a team of HR specialists, no matter how small, can help alleviate some of the pressures of employee management. They will also have systems and skills set in place for these activities, ensuring that it will be carried out with finesse. Investing in your current people — and consequently, your organization — is worth looking into, because they are the starting blocks of your soon-to-be empire.

So what are your options?

You do not need to fork out the same amount of money that big businesses do for a solid HR department. If you feel that the business really is not ready for an entire HR department of its own, it is possible to outsource part or all of the HR services you need to skilled and trustworthy specialists. More and more business of all shapes and sizes are considering this option, and enjoying the benefits it brings with it — the cost-cutting, efficiency, and provision of the skills you need.