Manager's Guide to HR Support for SME - LighterHR (No Text)
Guidance for Employers

Manager’s Guide to HR Support for SME

When it comes to the question “What HR support does a business need?”, there is no “one-size fits all” solution. The next question then becomes “How can my SME get the HR support it needs?”. There are many factors that need to be considered to determine the HR requirements of a business.

In this guide, we’ll provide a practical advice on how a business can determine the HR support it needs. It starts with looking at the business context for HR and determining the HR requirements of the business. Then looks at the different ways the support can be provided.

Don’t worry! Although we’re an HR consultancy, the answer to where you should get your HR Support isn’t always “from an HR consultancy”!

Of course, if an option to meet the HR requirements of a business is an HR consultancy then we will suggest it.

Time to read our post: 5 minutes

The questions answered in this post are:

  1. Guide to Understanding What HR Support a Business Needs

  2. How to Decide What HR Support a Business Needs

  3. Options to Get the HR Support Your Business Needs

  4. If I Go With Outsourcing My HR With an HR Consultancy, How Do I Choose the Right Provider?

1. What To Consider When Choosing the Type of HR Support Your Business Needs

There are many factors that determine the HR requirements of a business. The key factors are set out below.

Size

The requirements of a 10-person company are typically different to those of a 100-person company. If nothing else, for a larger business, there will be more people joining and leaving. There is increased potential for employee issues. and more people will be involved in line managing teams.

Industry Sector

Whilst employment law is the same no matter which industry sector a business operates in, there are significant differences between the HR requirements of different industry sectors.

As an example, a business operating in the technology sector will need strong confidentiality and intellectual property clauses in the employment contract. This wouldn’t necessarily be required for a retailer.

Another example is for businesses operating in the childcare sector. This will need strict background checks to be completed but other sectors may not need this.

Point in the Business’s Life

The HR requirements differ at different points in a business’s life. The requirements of a start-up are different to the requirements of a 5 year old company. These will be different from a company that’s been trading for 10, 20 or more years.

Plans for the Future

A business may be looking to grow organically or by acquisition. Perhaps it’s shaping up to sell. Maybe the plan is to doing what it does. The different plans all influence the HR requirements.

And that really is just the start of it.

We’ve worked with hundreds of companies over the years. We can confidently say that no two businesses have needed exactly the same thing from their HR.

2. How to Decide What HR Support a Business Needs

The first thing to do is to make sure that you’re clear about the different elements of HR.

This is our HR framework which should help you with this.

LighterHR - HR Framework
LighterHR’s HR Framework

HR covers everything that’s to do with managing and getting the most out of people. We’d suggest that you use the above to help you put together a list of what you believe your priorities to be.

  • Are you facing a lot of employee issues and is your focus to get those addressed?
  • Are you concerned that your contract and handbook isn’t as it should be?
  • Are you wanting to make sure that your team have objectives in place? Or ensure that performance is monitored and managed consistently across your business?

Our HR framework should help you work out what you’re looking for. However, you may still feel “I don’t know, what I don’t know” and that’s a fair comment. Whichever way you decide to address your HR needs, you’ll be able to fine tune your requirements as you go along with input from an HR professional.

3. Options to Get the HR Support Your Business Needs

Having decided what you need help with, you now need to decide how you get that help.

There are many options when it comes to ways to meet your HR needs and they all have a place.

The options included in this guide are

For each option we’ll consider the advantages and disadvantages and suggest for who this would likely be the best option. It is, of course, up to you which option you go for!

HR Call Centre

Advantages

  • You can be confident that you’ll get legally sound advice.
  • You’ll be able to check that the way you want to deal with a situation is aligned to legislation.
  • It should be a fairly low-cost option (although be careful of multi-year tie-in clauses that auto-extend).

Disadvantages

  • As you will be speaking with a different person each time you call, you can spend a lot of your time repeating the story and explaining how your business works.
  • You will have to do everything yourself. You will get guidance, but you will remain responsible for having the difficult conversations and being the person in the room.
  • Telephone guidance tends to be “by the book” so can be quite frustrating as you won’t get given all the options, just the “letter of the law” approach.

Business Which Will Benefit From Using an HR Call Centre

  • If you are fairly confident in dealing with HR issues and just want to know that there’s someone who you can check your thinking with, this can be a good option.
  • This option does focus on dealing with employee issues but is unlikely to provide you support for the other elements of your HR requirements.

In-House HR (Permanent)

Advantages

  • You will have someone onsite whose focus is on all things HR.
  • As a permanent employee, the individual will get to know your business and people so will be able to give guidance based on knowledge of individuals.
  • The cost per hour is lower than other options.

Disadvantages

  • As, from time to time, you will need someone to deal with complex employee issues, you’ll need to hire a suitably experienced person. However, they will likely be performing administrative tasks for most of the time. This means you will be paying a premium for an experienced HR professional with skills that you hopefully need infrequently.
  • When business decisions potentially have a negative impact on their work friends and colleagues, permanent in-house HR professionals may find it difficult to stay objective and do what is right for the business.
  • If it’s just one person and that person isn’t available, for example, on they are on holiday or unwell, then you can’t get support when you need it.

Businesses Which May Benefit Most From a Permanent In-House HR Professional

  • If you know that your business will have a regular, predictable requirement for a particular level of HR professional then this may be a good option.

In-House HR (Fixed Term Contract)

Advantages

  • You will have someone onsite whose focus is on all things HR.
  • The business can satisfy a short-term business need without an ongoing cost when the work has been completed.

Disadvantages

  • The individual who undertakes the work will gain a lot of knowledge about your organisation and build working relationships with your team but then will move on. This means that, should you need additional support in the future, the new resource will be starting from scratch in regards to business knowledge, working practices, relationships with colleagues, etc.
  • If it’s just one person and that person isn’t available, for example, on they are on holiday or unwell, then you can’t get support when you need it.

Businesses Which May Benefit Most From a Fixed-Term In-House HR Professional

  • This is a good option for a business who has assessed there to be a lot of remedial work to be done but, once that’s done their HR needs are limited.

Freelance HR Professional

Advantages

  • If you put an appropriate commercial model in place, there is a lot of flexibility with an HR freelancer. 
    • You should be able to engage on an entirely ad-hoc basis, if that’s what you want, or you can put in place support for a certain number of hours per month.
    • You should also be able to easily adjust the number of hours support you get.
  • If it’s not working out, you can change the freelance for an alternative resource

Disadvantages

  • If the freelancer is committed elsewhere, they may not be able to provide you with additional support when you need it.
  • The individual who undertakes the work will gain a lot of knowledge about your business and build working relationships with your team but then will move on (or you will become dependent on them). This means that, should you need additional support in the future, you’ll need to wait for the freelancer to be available or bring in a new resource who will be starting from scratch in regards to business knowledge, working practices, relationships with colleagues, etc.
  • If your HR team is just one person and that person isn’t available, for example, they are on holiday, unwell or with another client, then you can’t get support when you need it.

Businesses Which May Benefit Most From Using a Freelance HR Professional

  • Rather than employing an HR professional, you can engage with a freelance resource enabling you to easily change the level of support you get. This is a good option for a business that has a specific activity over a short-term, for example, there’s a lot of remedial work to be done, after which the business’s HR needs are limited.

Outsourced HR

Advantages

  • The business has access to the full range of HR skill levels (administrator, manager, director).
  • You can get access to extensive experience that has been gained working with hundreds of businesses that are similar to yours.
  • You will always have access to someone when you need help.
  • You can adjust the level and type of support that you get as the business needs change.
  • Relationships will be built at the business as well as the individual level, providing continuity of service

Disadvantages

  • You won’t be the provider’s only client. This means that you can sometimes have to wait to get an answer to your question or for an action to be taken.
  • As they aren’t working inside your organisation, they will be completely reliant on the information provided to them. Communication will be vital.
  • The cost per hour for consultancy resource is likely to be more than permanent resources.
  • Having a permanent presence in your office could get expensive (but it’s unlikely your business will actually need this).

Businesses Which May Benefit Most From Outsourcing Their HR

  • This is a good option for an organisation looking for ongoing support with day-to-day HR activity (dealing with recruitment, joiners, leavers etc.), addressing occasional HR issues (informally and formally), and which is looking at improving HR practices (implementing an HR system, improving performance appraisal, training managers, etc.).

Employment Lawyer (Retained)

Advantages

  • They are experts in employment law. If you’re facing an Employment Tribunal then you absolutely want an experienced employment lawyer right next to you (and we know some amazing lawyers who we are happy to recommend).
  • If you’re building a business that is heavily reliant on intellectual property, or putting a share option scheme in place, then use an employment lawyer to do this with you.

Disadvantages

  • Cost. Employment lawyers have a high cost per hour. It is a sound use of your business’s money if you’re facing a very difficult situation that could end up in an employment tribunal, but it can be an expensive way to get guidance on dealing with basic employee issues and matters.

Businesses Which May Benefit Most From Engaging with an Employment Lawyer

  • When it comes to dealing with complex legal issues or putting a complex or industry-specific employment contract in place, engaging with an employment lawyer is a good option.
  • Most employment lawyers are likely to only operate in the “Resolve and Compliance” areas of our framework so won’t provide a holistic service.

Combination of the Options for HR Support

There are also many variations/combinations of the options for HR support that may work for you.

For example, perhaps you’ll decide to have an internal office manager who takes care of HR administration. Then you’ll use an external provider for specific HR skills, for example, managing grievances and disciplinaries. This is a very popular model and one that lots of our clients operate (using our Pay As You Go HR Support service)

4. If I Outsource my HR with an HR Consultancy, How Do I Choose the Right Provider?

When it comes to picking the right HR outsourcing provider, there are a number of things to consider:

Give careful consideration to which elements of your HR you want to outsource.

There may be some things that you want to keep in-house and other areas that you want to outsource. By knowing what you want from your provider, you can ensure you focus your research and discussions on those things. You can then select a provider who are particular strong on the activities you are looking to outsource.

Think through the advantages and disadvantages of outsourcing.

You should spend some time thinking about the advantages and disadvantages of outsource. Then talk with your short list of providers around how they manage some of the potential downsides.

Avoid committing your business to a long contract

There are some HR providers that look to have you sign up for a minimum of 3 years. That may be problematic if your business needs change in that time. You will be unable to change where you get your HR support from (or end up paying two providers – one payment for the service you want and the other for a legacy agreement you don’t – we’ve seen that on many occasions).

Meet the team who’ll be supporting you

HR issues can be really challenging at times. Therefore, it’s important that you like the people who will be advising you.  You need to feel comfortable in being completely honest with them. You need to not dread having to call them!.

Get testimonials from the service provider’s clients

Of course, like employment references, the company will only put you in-touch with existing clients who will say nice things about them but it’s still worth a conversation with someone who has used the provider you’re considering so that you can see what they have to say.

Look to the future

Business change over time and so to their HR needs. When picking your supplier, talk with them about how the support can be adapted if your needs change.

Want to Know More?

When getting HR support for your business, sometimes the answer is obvious. Other times there’s a bit more to it, in terms of the business context, the requirements now and in the future, and the solutions available to you.

We hope this post has provided you some insights into selection the HR support that’s right for your business. If you’d like to discuss further then give us a call on 0203 319 1649 or contact us using the contact form.