top of page
  • Steven Meredith

5 Common Challenges Faced by Small Businesses Who Don’t Have Internal HR Teams

If you’re a small business trying to balance your operating budget, having an internal HR team in place may just be a pipe dream, at least for the moment.

While the financial savings may be obvious, what’s not so certain is the range of challenges that you may face as an enterprise if you decide to manage everything yourself.

1 - General Human Resource Management

  • Payroll Management: While small businesses have been helped in recent years with payroll handling software, this remains a challenge. There are nearly 5.5 million small businesses in the UK, each employing between 0 and 49 people all of whom need to be paid on time.

  • Employment contracts: Just like larger enterprises, small businesses need professional employment contracts. They don’t just safeguard employees and outline their terms of service but also protect the business itself.

  • Onboarding: If you’re a small business that has a regular turnover of staff, then onboarding can be time-consuming and difficult to get right.

  • Staff training: HR departments generally handle training provisions for larger businesses. It’s no surprise that for smaller enterprises this is often less formal and less effective because it is delivered on an ad hoc basis.

2 - Recruitment and Attracting Top Talent

One of the more important tasks that HR departments handle regularly is recruitment. Their role is especially vital if you are trying to attract top talent to your business where the recruitment process may be less than straightforward.

Yes, there are recruitment agencies that can handle the heavy lifting but these are likely to be less clued into your business and what it needs compared to an efficient in-house HR team. Particularly if you are recruiting high performers, the time taken creating job specifications, sorting applications and carrying out interviews can be very time-consuming.

Check out our customisable recruitment and talent management services as an alternative for your business.

3 - Time Taken Out of Your Busy Day

Running a business is hard work and HR considerations are likely going to take up at least some of your time. For business owners and their managers, this could have a huge impact on productivity, especially if there are major issues to contend with.

Many entrepreneurs don’t realise how much time is taken out of each day dealing with human resource issues of one kind or another. Research by breatheHR suggests that CEOs of small businesses spend a fifth of their working week on HR related issues at a cost of £18,700.

4 - Staying on Top of Legislation and Employment Law

Rules need to be followed when you employ people in your business and these are not optional or negotiable. HR departments are trained to handle issues like employment law, equality and health and safety in the workplace.

Business owners themselves, while they may have the best of intentions, are not properly trained and that can lead to mistakes.

Even small errors of this type can be highly costly for small businesses. For example, smaller businesses are more prone to unfair dismissal claims if they don’t have the right procedures in place and don’t follow the current regulatory guidance. Employees may feel they are being discriminated against under the Equalities Act if they are unfairly treated because, for example, they have a disability that is not adequately addressed by the company.

5 - Employee Disputes

Finally, the challenge of handling problems within the workforce can take up even more time, especially if there is no recognised HR department on hand.

It’s not just about dealing face to face with these kinds of issues but also ensuring that action is equitable and fair and also meets your obligations as an employer under current regulations. Disputes can be time-consuming and damaging in the long term if they are not resolved in the right way.

The Benefit of Hiring an HR Consultancy

While building an internal HR department is often logistically and financially beyond small businesses, some workarounds can help deliver what is needed. An HR consultancy can be hired on a needs basis and provide advice and fill in where necessary, particularly when it comes to issues such as recruitment and employment law legislation.

Check out our customisable HR Consultancy Services and book a free 30 minute discovery call to discuss your specific business needs and requirements.


bottom of page