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HR is strategic for small businesses

Small Business

HR is strategic for small businesses

October 14, 2015 Geoffroy De Lestrange

In the insurance business, there is this specific cover called “keyperson policy”. As the name suggests, it aims at covering one person within the company, whose absence could jeopardise the business. It’s quite easy to find examples: a senior craftsman with many years of experience, a manager with deep customer knowledge…

Interestingly enough, that kind of cover is often part of a package dedicated to small businesses, less so for bigger corporations. Yet there is no such precaution when it comes to managing human resources.

In small businesses, basic HR processes such as payroll are managed by an HR assistant (usually reporting to the Financial Director), or are outsourced to a payroll service provider. Recruiting can also easily be managed with a LinkedIn account, and a pay-per-use display of open positions on job boards. But what happens to strategic elements such as competency management, employee development and succession planning?

It might seem exaggerated to talk about such processes for a small business, but it’s actually exactly the opposite. In small companies, there is no real possibility for one employee to replace another on the go, in case of sick leave or resignation. The manager him/herself is also heavily busy with other tasks and can hardly manage an additional job.

So what’s the point in developing talents and managing the skills and competencies within a small business? The main answer is retention: very often, keeping employees motivated is a difficult task, and the budget for a raise or a bonus is often limited.

Yet how much time do managers of such companies devote to proper reviews of their staff to develop their talent the answer is easy: they don’t have anytime!. Yet we know that constant on-the-job evaluation, positive feedback and competency development are strategic for all companies. Let us not forget another huge advantage of small business: since teams are smaller, everyone knows each other. Therefore, a personalised approach by a manager and an HR professional are facilitated, as there is already an existing relationship between all employees in the company.


What does this mean in reality? Performance and Learning are essential to business success, and every organisation of every size should have the opportunity to train and manage their people effectively. Processes such as goal setting, competency management, performance reviews, employee development or succession planning need to be properly organised even in a small business.

In any company, employees want to be treated fairly. The risk in a big corporate would be to feel ignored in a huge organisation. In a small business, the risk would rather be to think that the manager isn’t being objective and impartial when it comes to evaluating someone’s work, paying for training or deciding on a pay rise or a succession plan.

Therefore, General Managers and HR directors of SMBs should give some thoughts to their talent management strategy, get out of horrible excel-based performance reviews and once-a-year training. Modern tools can help organise task-oriented performance reviews and efficient competency-related learning programmes to increase efficiency of employees across the organisation. In addition, managers need powerful analytics and reporting tools to turn performance data into valuable information for workforce planning and decision making.  Do SMB really need/understand analytics?

There is no reason why intelligent talent management should be for 1000+ companies only. HR in small businesses enjoy the high proximity to the workforce, which is a very strong asset to be close to the business and its operational realities. They need to leverage this powerful position to increase their commitment and demonstrate their impact on the company’s bottom line.

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