Why HR matters

HR is seldom a priority in the early days of a business, yet a proactive approach to people management is essential for building a better operation. It also plays an important role in compliance

Most new businesses run a tight ship. Whatever the business model, product or service, the goal is usually to sell into the market as quickly and efficiently as possible. Key players include the staff that make or deliver the product, and the marketing and sales teams that bag the customers. In these early days, few managers and owners would say that HR (human resources) is their top priority.

However, as a business grows it takes on more staff. At this point, issues such as recruitment, retention, training, and retaining a recognisable culture in the face of expansion, will all come to the fore. The business may also be forced to make redundancies, take disciplinary action against individuals or integrate staff from an acquired company. Growth can also create performance management issues. In such a constantly changing environment, it is vital to take a proactive approach to people management. Put simply, a well-run company should take HR seriously as not only a legal safeguard, but also a means to develop talent and move the business to the next level.

Employment law

The starting point in terms of HR for most young and growing companies is the need to comply with a mountain of employment law, originating from domestic and EU legislators. Just about every aspect of employer/employee relations – from recruitment to dismissal, redundancy and retirement – is covered by a complex raft of legislation.

“In a competitive labour market, where you really don’t want to lose key employees to your rivals, HR will help you retain the best people.”

At the recruitment stage, this means ensuring that when the job is being marketed, the wording of any advertising is in line with age, gender, disability and race discrimination rules. The same principle applies during the interview process.

In the case of existing employees, businesses must ensure that procedures are followed to the letter in areas such as disciplinary action, dismissal, promotion and remuneration. Every business should have clear and compliant policies in place. Every member of staff should also have a contract of employment and, ideally, a copy of a company handbook containing information on staff policies. It’s also important to maintain procedures that generate evidence. For instance, if you’re forced to discipline a member of staff for poor timekeeping, the line manager must produce a record of all relevant incidents.

Business driver

But the role of HR in an organisation doesn’t begin and end with the technical and legal policies required to keep the business on the right side of employment and discrimination laws. HR policy can, and should, play an important role in creating a better business. In a competitive labour market, where you really don’t want to lose key employees to your rivals, HR will help you retain the best people.

HR is first and foremost a management role. If we return to the early days of a business, when it got by with just a handful of employees, much of the training and motivation will be through constant contact with the founder and/or senior managers. It’s very much an ad hoc situation.

However, bigger companies require a more formal approach to people management, covering areas including:

  • Remuneration policy and incentivisation
  • Training
  • Performance management and appraisals
  • Career paths
  • Motivation and employee engagement
  • Retention
  • Maintaining company culture

Very few of the above exist in isolation. Good companies understand the importance of having a well-motivated workforce, but there are various ways and means in which to engage individuals and encourage them to go that extra mile. Praise from managers, incentive bonuses, share schemes, access to quality training and even extracurricular activities such as charity fun runs, can all play a part. Businesses such as Google believe it is vital to maintain a recognisable company culture. This is achieved, in part, by recruiting the right people, but also by reinforcing company culture through internal communications.

Centre of business

All of this puts HR at the centre of the business. It’s no accident that many of the companies that have hosted Breakthrough Masterclasses have chosen to put people management at the heart of their presentations. For instance, a recent Google Masterclass highlighted a recruitment procedure under which new hires must be voted in by at least five members of staff. And to engage and motivate those staff, Google allows personnel to spend 20% of their working time on their own projects.

So where do you start? Although technical skills, documentation and strategic guidance can always be provided by third-party consultancies, bear in mind that every growing organisation can benefit from having their own HR manager or director. It is, after all, your people who will be most familiar with your company’s ambitions and culture, and therefore best placed to drive your business forward.

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John Carroll - Helping businesses achieve International success. Head of Product Management & International Business, Santander UK