Six HR essentials for ‘A-Grade’ SMEs

It is fair to say that HR is considered a cost centre for most companies. And for SMEs, it usually doesn’t make financial sense to have a highly skilled (and expensive) HR team in-house.

Most SME owners tend to choose one of 3 options:

a)      Delegate ‘HR tasks’ to an existing admin, support or management resource

b)      Use a third party HR provider on an ‘as needs’ basis

c)       ‘Outsource’ their HR to a consultant

All options are valid from a (short term) cost saving perspective, but are they going to reduce your business risks, make you more money and turn you into a sought after ‘A-Grade’ employer?

As with all our blogs, this one is based on the assumption that: ‘Every SME business owner wants less stress, more money and would love to have a high performing team of people helping them achieve that.’ 

Progressive business owners who want to have a great company will look beyond the first option of delegating HR to an inexperienced internal resource. But how do you identify HR advisers who can actually add value, improve your bottom line and not just ‘deal with HR stuff’?

The following checklist will help:

1.    Have your advisers walked in your shoes? Many HR consultants are ex-corporate managers who haven’t dealt with the stresses of owning or running an SME. There are obviously significant differences between being a manager versus being financially responsible for your own employees.

2.    Do you have access to a team – or are you reliant on a single consultant? Succession and contingency planning are critical HR strategies, so you probably want a team that practices what they preach and have a diversified skill base to draw from.

3.    Do your advisers understand your business numbers and know how to make you more money? At the end of the day a good HR adviser needs to know how to model, influence and measure financial impacts. Ask potential advisers for performance evidence and statistics – how have they helped other business owners boost their return on human capital, reduce HR costs and increase profitability.

4.    Are your advisers up to speed with the latest technology, software and trends that can help you lower process costs and increase productivity?

5.    Do your advisers ask you hard questions and understand the strategy and core processes of your business? Your HR approach and culture must be connected to your vision and strategy, or it simply won’t work. It needs to engage your people at every stage of your business value chain

6.    Are your advisers unafraid to challenge you and your leaders, talk straight and tell you what you need to know (not what you want to hear)? Good advisers don’t try to protect their fees by skirting around the edges, they have the courage to put their money where their mouth is and help their clients ‘play to win’.

Like a good external accountant, you don’t need HR expertise all the time, but regular ongoing contact will ensure that your advisers are involved in your strategy, ‘get’ what needs to be done and can add value across a number of areas.

Think beyond just ‘outsourcing’ to developing a partnership. The performance and engagement of your team requires input and energy from your leaders, so the role of a trusted partner is to bring an ‘inside and out’ perspective, working alongside your key people.