For a lot of small businesses just getting off the ground, HR is woefully treated as a last resort when business leaders feel out of their depth.
That’s not necessarily a value judgement or a deliberate choice. It’s often the result of the nature of founding a business in the first place: the idea comes first; establishing culture comes later. While people management should come with the territory of running a business, in the early stages, such gaps often feel workable – until they aren’t.
The Employer Who Waits
It’s a pattern most HR professionals are familiar with. Paula Harwood, a client HR consultant at TC Group, is one of them. An expert who advises small and medium-sized businesses on people strategy and employment compliance, she has watched the same dynamic play out across her client base for years.
“When a company starts out, it often evolves quite naturally,” she says. “But it can escalate very quickly.” By the time HR comes onto the agenda, habits and culture have already formed around decisions nobody made deliberately. Working back from that is a different, harder task than building things in the right way from the beginning.
“Things can’t necessarily just be put off and off,” she says. “Things need to be right from the outset – that’s going to save a lot of headaches in the long run.”
The function being asked to hold all of this together is, by most measures, still not getting the support it needs. Research from Ultimate Resilience, drawn from more than 3,000 HR practitioners, finds that only 13% feel well supported at work.
This year’s International HR Day theme – “Empower People to Lead Change” – speaks directly to that pressure, arriving at a moment when the compliance landscape for small employers has rarely been more demanding. But empowering HR to lead change and involving people teams in the decisions that drive it are, for many small businesses, still two very different things.
The Employment Rights Act Has Raised the Stakes
The volume of legislative change is making this more difficult. “It’s getting harder and harder each year,” Paula says. “There’s a lot more rules and regulations, a lot more rights coming in.” The Employment Rights Act is the sharpest example: with a range of protections now extending to employees from their first day at work, the quality of hiring, induction and early people management carries more legal weight than it did in the recent past.
New YouGov data commissioned by Employment Hero shows 53% of businesses are worried about unintentionally breaching new employment laws 56% believe employing staff has become more complex over the past year.
“With different rights from day one, it’s more important and more vital for companies to make sure they’re following the right processes from the start,” she says. “Good planning, good training plans, good induction plans – just to make sure that person is a good fit for the business and vice versa.”
Recruitment has both hardened and become more valuable as a result. The businesses managing it well are the ones that were already thinking carefully about who they were bringing in and why – not because the law required it, but because they understood what poor hiring costs in a small team. As Paula puts it, the measures businesses are now being pushed to implement “probably should have been there anyway.”
What Good Small Business HR Looks Like
The argument for getting HR foundations in early isn’t just about compliance. It’s about what becomes possible when a business isn’t permanently catching up with itself.
Paula points to upskilling as one example. In an environment where change is arriving faster than most businesses can plan for, the instinct is to focus on technical training. But that’s not where she sees the real gap. “It’s more about soft skills,” she says. “How can we upskill people to be ready for change and be adaptive? It’s more about those cultural soft skills – and being more human – than the processing side of things.”
When the next wave of change arrives, whether it’s a new piece of legislation, a new tool or a new set of expectations from employees, the businesses best placed to absorb the impact are the ones that have built the right culture and the right people around them from the start.
“HR is still very undervalued,” Paula says.
“It’s all about people, ultimately. Any business, even a sole trader, is about that person and what they deliver. And therefore you’ve got to get the culture right – and HR plays such a huge part in that.”
