HR professionals play a critical role in helping SMEs expand theirÂ footprints.
By Simon Kent
Growth is always on the agenda for businesses andÂ the start of a new year is a great time for new effortsÂ to be made and strategies to be clarified. Building aÂ company from SME to a larger entity is a challengeÂ in many respects. Indeed, this progression can markÂ the creation of a proper HR function from humbleÂ beginnings.
âThe founders of organisations often start by hiringÂ people they know,â says Dr. Paul Aldrich, global headÂ of people and performance for Pemberton AssetÂ Management.Â Due to the size and nature of the SMEs, all peopleÂ information is likely to be held in basic spreadsheetÂ format with little or no specific HR system in play.Â âThey outsource the legal and compliance aspects ofÂ employment (contract templates and an employeeÂ handbook) to law firms and other specialists.â PayrollÂ is also likely outsourced to a specialist, Aldrich says.
However, as the company seeks to grow, this approachÂ becomes untenable. âAt some point, the founders willÂ run out of contacts to hire,â he explains. âThey may beÂ too busy to focus on strategic workforce planning andÂ will ideally minimise time spent on the administrativeÂ side of people management, as they need to focusÂ more directly on business growth through product andÂ service development and customer acquisition.â
For Aldrich, the answer is to further outsource theÂ function beyond purely operational elements, perhapsÂ finding someone to focus on the job for two or threeÂ days a week. As the company grows further, it mayÂ then become more attractive to bring the function in-houseÂ and establish a dedicated HR team.
But what should HR expect or aim to do during aÂ period of sometimes fast and always crucial growth?Â Peter Ryding, a serial turnaround CEO and founder ofÂ VicYourCoach.com, says that when introducing andÂ building a formal HR function, it is important to retainÂ the positive characteristics of an SME. âIn the modernÂ VUCA world, HR has a vital role in SMEs growing intoÂ something larger,â he says. âSuccessful organisationsÂ need speed and agility or they die. This is easy forÂ SMEs, yet gets much tougher as you need to introduceÂ new processes and systems to bring efficienciesÂ without killing off innovation. The trick is to have theÂ right cultureâand that is at the heart of what HR canÂ direct.â
Not only does HR have a crucial role in ensuringÂ the culture of an organisation is consistent andÂ positive as it grows, but it must also ensure thatÂ tenured employees remain engaged, motivated, andÂ appreciated as they are joined by more colleagues.Â âAs new people with new skills are recruited, HRÂ must ensure that the existing employeesâthe onesÂ who built the SMEâare equipped, empowered, andÂ engaged to learn new skills too,â he says. âDonâtÂ let them feel left behind or less relevant or you willÂ create resentment and âthem and usâ conflict. EnsureÂ they realise they have to keep learning to keepÂ earning to remain employable, and that by doing soÂ they have the same career opportunities as the newÂ recruits.â
Case Study: Remote Bob
Having founded her start-up Remote Bob in FebruaryÂ 2019, Barbara Krecak says that it can take time toÂ understand what the people are capable of doing.Â This is an important ground-level considerationÂ that has to be in place before any expansion can beÂ considered. Remote Bob, which offers outsourcedÂ back-office support for companies, started with onlyÂ two people split between Croatia and London. It nowÂ has a full-time team of seven and 40-plus regularÂ freelancers.
One of Krecakâs initial challenges was understandingÂ if her team members had been set realistic targets.Â âIn well-established companies, you know thatÂ the average sales cycle is three months and if aÂ salesperson doesnât deliver anything that means heÂ is underperforming,â she explains. âIn a start-up,Â everything is new and experimental, so even if no oneÂ delivers anything for six months that maybe meansÂ that the sales cycle is nine months longâor maybeÂ not. That is a combination of people managementÂ and HR challenge.â
Without this baseline understanding, the typical HRÂ responsibilities around people development, training,Â and productivity are difficult to measure. Moreover,Â until such aspects become clear, it is also difficult toÂ consider bringing in more talent and determine whatÂ that talent should look like. Krecak has now hiredÂ an external HR specialist to help with her businessâÂ expansion. âThe biggest benefit of hiring an HRÂ person, in my opinion, is help with recruitment,â sheÂ says. âWhen hiring new employees, I always see onlyÂ the good sides of everyone. The HR person is thereÂ to analyse personality and give us their professionalÂ opinion.â
Since the company is clearly evolving as it grows, itÂ is also difficult to introduce and establish HR policiesÂ above and beyond the basic essentials requiredÂ for employing people. As Remote Bob continuesÂ to expand further, new policies will no doubt beÂ introduced, but at the moment, daily issues andÂ challenges by far outweigh the importance of suchÂ paperwork beyond the need for compliance.
Ultimately, the role of HR in building a businessÂ extends beyond the power or influence of policy.Â Close attention to culture and employee well-beingÂ at a time of change is vital if a company is to growÂ successfully and make a bigger mark on its market.Â Sue Lingard, director at Cezanne HR, says that theÂ growing pressures on companies through compliance,Â globalisation, and employee experience have madeÂ HRâs role more important than ever.
âIf they are looking to aid the growth of the business,Â happy employees are vital,â she says. âAs employeeÂ performance is directly linked to business productivityÂ and growth, if HR is to retain as well as develop theirÂ talent, successful performance management is in theÂ interest of the organisation as a whole, alongside itsÂ benefit for employees. Thereâs no doubt that talentÂ must grow with the business.â
There is no doubt, too, that HR as a function mustÂ also grow in order to consistently meet the demandsÂ of the business and all of its employees.