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No HR? No growth! by Katriina Tahka

Inside Small Business, April 2021

As with any industry, there are plenty of misconceptions, assumptions, and myths surrounding HR. The businesses that decide to skimp on their HR costs are at a disadvantage. Brands that utilise HR services are not only better prepared for unexpected events and misconduct, they’re also more productive and tend to foster stronger core values which translate into a better brand reputation and a higher functioning team.

HR might be the missing link that is sorely needed by Australian SMEs

Entrepreneurs who come from big businesses are less likely to use HR services. If you look at the data in Australia, 89 per cent of businesses are SMEs, and of that percentage, 28 per cent are micro-businesses. That means they have fewer than five employees. Among these micro-business owners, the vast majority of them are corporate educated, meaning they come from a large corporation. Often, when someone comes from a big business and they start working in an SME, they’re more aware of their reduced budget.

This can lead to an assumption around HR: that they’ve experienced it before, they know how it works, and they may have even copied over some of the HR contracts and documents (like performance review analyses) from their previous endeavour to repurpose into their own SME.

You don’t know what you don’t know

These entrepreneurs have all the business knowledge to run a successful endeavour, but, HR is a field on its own. While entrepreneurs keep up with the latest marketing innovations and workflow systems, understanding the industry-specific changes in the regulatory environment of HR requires someone to be specifically entrenched in this field.

This leaves your brand and reputation at risk since HR is a field of the law. This leaves you the business owner, running the gamut on compliance. You’re also ill-equipped to handle challenging situations and difficult conversations with employees. More often than not, this leads to overly complicated situations that become long, drawn-out, and that begins to fester over time. For example, without HR support, you’re tempted to avoid a difficult conversation with a problematic employee. This person’s action starts to impact the rest of the team and impede productivity. As the head of the team, it’s grinding you to keep paying this person but you want to believe everything will ease eventually. Since there’s no HR person to delegate matters to, the situation brews until it eventually explodes into a major office drama. Before you know it, the boss blows their cool and words are exchanged. As a result, external organisations, like Fair Work Australia, are involved and it turns into an unpleasant affair.

HR is actually very affordable

Having professional HR services in place is one of the fundamentals of employing people, you can’t and shouldn’t do it yourself.

HR isn’t an expense you can “save for later” when you have a bigger team, from the moment you start to employ people, you have a set of values that require clear guidelines on how you wish your employees to behave. This dictates your workplace culture. If you don’t take a proactive stance on creating your team’s culture through principles, it is inadvertently created for you and it might not be what you wanted.

Katriina Tahka, CEO, A Human Agency

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