Are you really saving money by getting rid of HR?

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Have you ever stopped to crunch the numbers on whether having no HR presence in your organisation is really saving you money? I’m not talking about an admin or payroll person who sends off site clearances or tells employees how much leave they have accrued, I’m talking about strategic human resource management – implementing recruitment strategies to ensure a more quality hire, creating a compensation strategy to ensure your salaries & benefits are attractive to potential candidates and enough to stop your star talent from jumping ship, writing contemporary & legally compliant workplace policies and procedures to develop culture, embed standards and build reputation and creating a performance culture.

A report from the Society for Human Resource Management indicates an organisation’s size often determines the impact of not having an HR representative or a limited HR team. “In smaller organisations, the HR function or department … may have interactions with other staff that more often than not centre around duties directly related to having a primarily transactional role,” it states. Smaller companies are unlikely to employ an individual in human resources, or to designate the duties to another job function, by default making them adhoc HR personnel. Recent surveys of SME’s indicate that as much as 82% of employees fulfilling this role within the organisation had no formal HR training, without the proper training, tools and resources to perform HR related tasks, organisations with adhoc HR personnel can inadvertently suffer serious consequences.

Failure to Address Performance Issues

When operational managers perform multiple roles, HR processes such as performance management are unlikely to become a priority unless a crisis occurs. Operational managers may be unwilling to tackle poor behaviors or substandard performance among their employees. Alternatively, they may lack the necessary skills or experience to do so. Failing to address performance and behavioural issues in a proactive manner can lead to a loss of productivity and increased employee turnover, both of which can adversely impact a company’s profitability.

Failure to Develop Employees

With no specialist HR personnel to guide them, small companies are likely to lack the formalised learning and development structures that exist in larger organisations, such as annual appraisals, training needs analyses and development plans. The lack of such processes can lead to training needs being overlooked and a failure to keep staff up to date with best practices. If employees see no opportunities to learn and develop within a small company, they may choose to leave to further their careers.

Difficulty Attracting Top Talent

The quality of employees within a small company is particularly important, given that resources are limited. Attracting new employees of the correct calibre can be a challenge for small companies if they find themselves competing with large organisations. In large organisations, HR managers can ensure that the company’s brand is promoted to job seekers. HR managers achieve this through effective recruitment and compensation strategies, without this assistance smaller organisations can be seen as the poor cousin in comparison.

Failure to Comply With Employment Legislation

Employment legislation and government regulations place the same burdens on small companies as on large organisations. While HR personnel within large organisations have time to keep up to date with changes in employment legislation and regulations, this is much more of a challenge for overstretched managers in small companies. Failure to understand current employment legislation can lead to unintentional breaches of employee rights. This may occur when a company denies employees a right to which they are entitled, or a manager dismisses an employee unfairly.

The right outsourced HR solution — one that connects you with a dedicated HR professional that knows your business personally and has proven processes in place can help. Outsourced HR solutions can help manage your risk, keep you compliant, and give you peace of mind. And in doing so, you’ll be placing your company in a strong position to grow and prosper.

Based in Kalgoorlie, The People & Culture Office is an independent HR Consultant who can partner with you to offer a one stop HR solution, we only charge you for the work we perform; no contracts, no annual or monthly fees, just quality service. Click here to learn more