Everything you need to know about outsourcing HR for small business.

For many small businesses, spending time, money, and energy on human resources feels unproductive. Menial tasks like payroll and hours tracking eat into time that could be spent on company growth. Meanwhile, the tricker sides of HR such as dealing with employee relations, hiring the right people, and managing performance – sometimes need more expert support. This guide to help you understand what type of support is on offer: 

 

In other words, the paperwork. Even for small businesses most of this is a legal obligation, but others are good practice to protect your business interests. Typically, your business will need employment contracts, to employee records, some policies. You are also likely to need a process for holiday requests, statutory leave, expenses, and payroll, as well as a basic framework for probation and termination. In this space, small businesses have lots of options: 

 

Standard contracts, policies and procedures are available (sometimes for free) online or via some of the small business membership organisations. Free documents will be generic templates, so it is good practice to check they are fit for your purpose. When it comes to contracts, it is true that the devil is in the detail – so it is worth investing in these to get them right at the beginning. Another common pitfall includes contracts are not regularly updated and reviewed, as employment legislation in the UK is updated twice a year (April and September) so whichever route you choose, make sure you audit these regularly, ideally one a year minimum. 

 

HR Admin can be done in-house, which will take up a trusted employees’ time but can work for many, often this type of HR support sits with finance or an accountant until specialist advice is needed. Don’t forget technology –good HR Platforms can cut HR admin time in half, meaning that simple tasks can be automated, and employees’ can update their own records, whilst meeting data protection requirements. 

 

What we mean here is the employee relationship. Anything involving employee issues, manging people’s performance, behaviour or conduct. This does not have to fall to HR, of course – a skilled manager will be able to (and should) have a close relationship with their team and be able to deal with initial concerns upfront. 

 

However, often managers need backup or support with tricker issues, things they have not come across before or complex problems. In this space, it is important that advice comes from someone with both the experience and technical knowledge of employment law. 

 

The main HR Qualification to look our for is CIPD – someone with CIPD Level 5 (known as an associate) or ideally CIPD Level 7 (they usually have MCIPD after their name once they are fully qualified). Someone with 5+ years of dealing with employee relations is a good bet, as they will have seen similar issues before and have the experience of what steps to take. 

 

Common issues dealt include employee grievances/complaints, staff being absent and performance issues. Employee Relations work is a specialist area, as it takes a considerable amount of diplomacy but also commercial acumen to work towards outcomes that protect your business as well as keeping employees happy. 

 

This is the bigger picture strategy for small businesses. Employees are expensive so it makes sense for most businesses (usually at 20 employees plus) to start thinking more strategically about managing the workforce. Typically, this level of support is needed during a period of business change – which could mean growth, restructure, planning for exit, sale, or merger. 

 

Projects could include revamping performance management that has slipped, undergoing restructure and redundancy consultation, a hiring strategy, supporting managers and Directors with management or leadership, succession planning for future leaders, reward and retention or creating a company culture in line with business values. 

 

This is where a relationship with a trusted HR business partner – usually someone who has 10+ years’ experience and is MCIPD qualified as well as working at the most senior levels – can really add value. It takes time to find and develop this trusted relationship and you will ideally need someone in striking distance of your operation, who can meet with you on site, in your premises, to really understand what your business is looking to achieve and how best they can help you. 

 

One of the obvious advantages to outsourcing this level of HR support is the cost savings: this is senior level, flexible resource which you should be flexible, something you can dip into when business requires it. But there are other advantages too – a external HR Consultant comes from an objective position. They should be able to challenge and give you honest and impartial feedback – what comes from a well-rounded point of view. HR Consultants usually work with several businesses – meaning they have probably seen the challenges you are experiencing many times before – and they must keep up to date with people trends and employment legislation.