6 Benefits of External HR Support
Small to medium sized businesses (SMEs) face many unique challenges owing to their size and relative capital. One such challenge that has been the focus of recent discussion is finding an effective way to manage their human resource and employment obligations. Here are six reasons that every SME can benefit from having external HR support.
- Compliance
Like any other employing entity, SMEs have a range of responsibilities and obligations arising out of their status as an employer. This includes certain record keeping obligations, minimum wages and conditions, processes, and procedures. With an increased focus on enforcement by various government agencies including the Fair Work Ombudsman, it is exceptionally important that SMEs are across all their various lawful obligations. Frustratingly however, understanding those obligations and then putting them into practice is a complex process which can be daunting for many SME owners. An external HR consultant can cut through all the red tape and assist SMEs with managing their obligations arising out of the Fair Work Act 2009 (Cth) and the relevant Modern Award or Enterprise Agreement.
2. Cost Effective
Larger businesses have an advantage by virtue of their proportionately large revenues, and many will have a dedicated department which deals with human resources, workplace relations or ‘people and culture’. These departments are often full of highly qualified people who know the Fair Work Act backwards and have years of experience in dealing with employee management, dispute resolution and workplace investigations. For larger businesses having a ‘People and Culture Manager’ is a no-brainer, but for SMEs who may only employ 20 people this is a luxury that they cannot afford. Nevertheless, they are bound by the same rules as the big operators. Accordingly, having external HR support should be seen and a ‘must-have’, as it allows a smaller operator to have access to the same highly qualified and experienced people without the six-figure salary that ordinarily comes with it.
3. Sleep Easy
Having a dedicated external HR specialist will almost certainly allow a small business owner to sleep easier at night.
Knowing that your business is compliant with its employment and minimum wage obligations is itself a calming influence, but also knowing that you are equipped to deal with any obstacle or curveball that is thrown in your path is nothing short of a relief. Whether it be a sexual harassment claim, workplace bullying allegation, unfair dismissal claim, serious misconduct matter, underperforming employees, Fair Work Ombudsman audit, discrimination in the workplace or underpayment of wages complaint, SME owners will rest easier knowing that their external HR support is there to navigate any such troubled waters and take the burden off their shoulders.
4. Reduce Staff Turnover
Some employees leave their employers for financial reasons, but this is a lot less common than people think. Some of the most common reasons that people leave their jobs are in fact:
- Feeling underappreciated
- Feeling burnt out
- Lack of flexibility
- Poor workplace culture
- Having a negative relationship with management
- Lack of career growth opportunities
- Being unhappy at work
- A sense of distrust of their employer
- Poor mental health
Small operators often find that that with external HR support and HR services in place, they see an improvement in staff morale, employer-employee trust, and a more positive workplace culture. This in turn leads to a reduction in staff turnover.
Having a high staff turnover costs employers’ significant amounts in lost productivity, recruitment costs and underproductive labour whilst new employees are being inducted and training.
5. Think like a big business
Good Human Resource Departments do a lot more than simply react to problems when they arise. Reacting to issues is a necessary and important part of employee management, however being proactive is even more vital. Large HR departments will often focus on developing processes and procedures that are designed to prevent such issues from arising the in first place, or if they do arise, making them less impactful. They will also invest lots of time into making significant increases to employee productivity which directly benefits the business’s bottom line.
For smaller businesses, this is often a luxury that they cannot afford. As a result of this, they are often stuck playing on the backfoot.
External HR support is like having that large HR department, without a huge price tag. It allows smaller businesses to start thinking in the same way that their larger competitors do, but at a fraction of the cost.
6. Take the pressure off yourself
Small businesspeople carry an enormous amount of responsibility and are often stuck wearing many hats. They are often the CEO, CFO, HR Manager, employee counsellor, financial controller, bookkeeper, salesperson, cleaner, operations manager and many more. Some small businesspeople are luckier than others and can outsource some of this work or employ people to do it for them. However, for many, this is an unavoidable part of running a small business. Engaging an external HR consultant can be a smart and cost effective way of alleviating some of this stress.
For assistance in any employment disputes or other human resources concerns, reach out to us here.