HR Software News

SMEs 'face HR challenges as they expand'

Posted by Editorial Team

Managing a team of staff can prove challenging as small to medium-sized enterprises (SMEs) expand and become larger, more established companies.

In a firm's early days, when they are merely starting out, they may find informal methods work well for a small team of employees.

However, as an organisation increases in size, HR systems may need to be reviewed and new solutions introduced.

Managing consultant at Peopleessentials.co.uk Michelle Bailey explained how rules and regulations may appear "complicated" and intimidating to SMEs that have always relied on a simple system.

The expert claimed human resources can be "quite scary" for some companies, as there is "an awful lot of news out there which is just [scaring people] with all the laws".

Despite this, Ms Bailey described how once individuals move past this view they will find employment regulations are not too difficult to adhere to and understand.

"I do think there's this kind of legacy of employment law that people find difficult to get their heads round and that's probably one of the hardest things," she commented.

SMEs that employ fewer than ten staff members are unlikely to notice the complexities of HR rules, with changes more commonplace as businesses expand.

Ms Bailey noted that informal systems are often favoured by small companies, as it is "easy" to talk with a small group of employees.

At this stage it is relatively simple to keep them informed and there is often less management required, it was implied.

Bosses will find it is more important to focus on establishing "personal relationships" and maintaining these, according to the expert.

Once payrolls feature more than a dozen staff members this may change, as the dynamics may become increasingly complex.

Ms Bailey said: "You can't talk necessarily in the same way and you can't be confident that the message you give out will be interpreted in the same way by everybody."

It was noted that rather than being able to "take everybody down the pub" to chat about developments and performance, individual meetings may have to be arranged.

This introduction of formality was suggested as where things can become difficult for SMEs.

"You have to start taking a more hands-off approach as a manager and you can't rely on having a personal relationship with everybody," Ms Bailey advised employers.

Jon Cowell, director at Edgecumbe Consulting Group and Associate Fellow at Oxford University's Said Business School, recently explained the importance of effective management.

The expert remarked how it is vital firms have strong leaders that make it clear to staff members what the organisation is trying to achieve overall and how it will get there with the help of employees.

SMEs were reminded that recruitment policies may have to change with expansion, as a prospective employee's attitude to work is no longer the most important trait.

Although it is important that individuals fit in, firms need highly skilled people in order for the business to remain a success and go from strength to strength.

Ms Bailey claimed this is "typically one of the big things that changes" in terms of a company's HR policies and approach.

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