Opening the door to good HR practice can be daunting for many small businesses. But what if, you could categorically say you are paying your employees correctly and competitively? What if, by doing so you achieve far greater cohesion in your workplace? What if, you have the best process to hire the best employees?
These are just some of the benefits of investing in HR. For Small to Medium Enterprises (SMEs) outsourcing this specialist area makes so much sense because it provides SMEs access to a broad range of expertise without the high cost of employing in-house HR personnel.
HR encompasses everything from the decision to recruit through to paying employees properly, establishing performance expectations, managing performance, safety, training, leadership, consultation, administration and record-keeping, and exiting employees appropriately. Looking at this list (which isn’t exhaustive) it’s hard to argue that all of these aren’t important for any business to be sustainable and successful.
But we have been successful so far without a HR professional I hear you say. If it ain’t broken…
There are many reasons businesses engage a HR expert, some include the requirement to deal with an urgent industrial matter such as an unfair dismissal or a bullying or harassment complaint. Others engage to stem their frustration at spending too much time on distracting people matters, while others want to be proactive having grown their business successfully to a size and complexity where they have realised, they can no longer wing-it!
All these reasons are very valid reasons to engage a HR specialist but there is one thing for sure, there will come a time where the support of a HR expert will be required whether it be to manage a complex employee relations matter or develop better systems to remain competitive. The question is, do you want to be in control of your business and proactively manage your greatest resource, or spend your profits on litigation costs, workers compensation or the fallout of a bad recruitment decision?
Long gone are the days when HR was centred around the intangible aspects of people management. In the twenty-first century, HR has grown into a necessary and valuable component of any business strategy. It is, first and foremost, focussed on compliance to mitigate risk for the business e.g. award compliance (this alone is a minefield), flexible work arrangements (there is specific legislation and fines for non-compliance) probity in regard to recruitment, rights of casual employees, anti-bullying and harassment just to name a few. For businesses that do not manage their compliance properly, all their best practice initiatives will pale into insignificance if they do not meet the required standards. Whilst George Calombaris has been used relentlessly as an example of what not to do as a business owner, he is a great case of how devastating the impact can be. The lure to work for a renowned and respected leader in his field was a great attraction for many employees and he rode the wave until it came crashing down on him. Working for George is no longer the badge of honour it might have been some time ago – simply because he didn’t have the right and qualified people overseeing his compliance – which is the very foundation of HR management. When it comes to workplace compliance, ignorance is no defence, even for SMEs.
The right people for the right job
Put simply, having a payroll officer process payroll, in most cases, is not enough to mitigate your risks (no slight intended on payroll employees) but award interpretation can be very complex. Furthermore, having a finance manager managing HR (simply because payroll reports to them) again is not enough to mitigate your risks. A HR manager would not be tasked with completing the company financials (for good reason) and nor, for the same reason, should a finance person be held accountable to interpret awards, administer contracts of employment and develop workplace HR policies and procedures.
Access to a suite of HR specialists
So, how can SMEs manage their HR compliance without breaking the bank?
Collaboration is the absolute key to getting the best outcome. Outsourced HR gives a business direct access to a suite of expertise and a diversity of experience. Engaging with an outsourced HR provider means having a team of experts on hand, across all facets of HR to meet the complete needs for SMEs.
“Each of our clients is assigned a dedicated HR Business Partner, but the beauty is, sitting behind that person is a full team of specialists supporting their colleague and the client.” Skildare co-founder and Director Di Loong explains. “We get to know each business intimately and their industry, the relevant awards and legislation, and as we become an integral part of their broader team, we plan and execute their HR needs in priority order.”
Furthermore, compliance, for the most part (with some exceptions), doesn’t change for the size of a business, i.e. small business versus big business, just the rate of effort to be compliant does. This is at the heart of the outsourced model whereby the output required for each business is dictated by their needs, size, complexity etc. without the additional fixed on-costs that are not required across the calendar year.
“We keep it simple, our clients are not mammoth multinational companies, they are smaller, with flatter structures so do not need processes that tie them in knots.
It’s about having authentic relationships. Given we do not have authority within our client’s workplace, we are very focused on influencing positive behaviours – and to be influential you have to know your stuff!” says Di.
Customisation and flexibility
It doesn’t matter if a business has four or 4,000 employees – HR is still required. All businesses need to be compliant with legislation, manage performance, keep people safe at work, pay employees in accordance with the applicable industrial instrument (be it awards, Enterprise Bargaining Agreements, Employment Contracts), engage with them and retain them – it is, no question, a lot to do.
An outsourced HR model can be completely flexible and custom-fit to a business’ needs. “The nature of HR is that it tends to peak and trough, depending on what is happening within the business at any given time,” Di said. “The flexibility of the outsourced model is that it can be adapted to work in with the business needs at the time.”
In the end, outsourcing HR is a smart, strategic move for any SME to assist in managing the most important asset to their business.
Skildare provides your business with smart and simple HR strategies and advice, to craft an engaged workplace culture that brings out the best in your people. Contact a member of our team to discuss your HR needs – 02 4940 8743.