HR can be a minefield for small business owners. Like any other vital business support function (such as accountants) it is full of jargon and be confusing.  
Running a successful SME in the UK requires careful attention to many areas of business, and that includes human resources (HR). While there are certain HR practices that are essential for SMEs, there are also additional measures that can be considered as nice to have. 
Read on to understand the essentials you must have in place from an HR perspective (the things that are legal obligations and protect your organisation from risk) and differentiate them from those that are nice to have. 
Essential HR Practices 
Recruitment and Selection: Having a structured recruitment process is crucial for SMEs to attract and select the right people This involves creating clear job descriptions, conducting fair interviews, and implementing robust background checks to ensure the suitability of candidates. 
Employment Contracts and Policies: SMEs need to provide written employment contracts that outline essential terms and conditions, including job roles, responsibilities, and remuneration. In addition, having well-drafted HR policies addressing areas such as equal opportunities, anti-discrimination, and health and safety is vital. 
Payroll and Benefits: SMEs must have a reliable payroll system in place to ensure accurate and timely payment of salaries and adherence to legal obligations. Offering competitive employee benefits, such as pensions or health insurance, can help attract and retain top talent. 
Performance Management: Implementing a performance management system allows SMEs to set clear goals, provide regular feedback, and evaluate employee performance objectively. This enables individual growth and helps align employee efforts with business objectives.. This means employees understand what is expected of them.  
Legal Compliance: Adhering to employment laws and regulations is non-negotiable for SMEs. Staying up-to-date with legislation related to employment contracts, working hours, holiday entitlement, and employee rights is essential to avoid legal disputes and penalties. 
Nice-to-Have HR Practices  
Employee Training and Development: While not always feasible for SMEs with limited resources, investing in employee training and development programs can enhance skills, productivity, and employee engagement. This can be achieved through workshops, mentorship programs, or online learning platforms. 
Employee Engagement Initiatives: Implementing initiatives to foster a positive work culture, such as team-building activities, recognition programs, or employee well-being initiatives, can boost morale, productivity, and employee retention. We would also add that having your HR essentials in place is a great foundation for positive company culture.  
Succession Planning: Although more commonly associated with larger organisations, SMEs can benefit from identifying potential future leaders and developing succession plans. This ensures a smooth transition during periods of change or when key positions need to be filled. 
From a HR perspective, SMEs in the UK must prioritise essential practices such as recruitment, employment contracts, payroll, performance management, and legal compliance. While nice-to-have initiatives like employee training, engagement, and succession planning can provide additional benefits, they may vary in feasibility depending on the resources available to the SME. 
At Humber HR we offer a free 30-minute HR Healthcheck to audit your HR essentials.  
Find out more by emailing  
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