You will know when you have a great HR strategy when your HR practices and responsibilities are aligned to the organisation’s goals and mission statement, resulting in growth and achievement of your business plan.
Let’s face it, HR starts as an admin function for the majority of businesses. Most SMEs start with a “muck in” approach and whoever is around at the time will write the vacancy advert….draft the policy…. greet the new recruit. A quick google search is relied on to answer any queries and a “wing it” style is quickly adopted in many areas including HR; whilst many start-ups survive initially with that approach, it can come at a price. Based on a survey conducted by Forbes in 2015, 90% of start-ups fail in the first twelve months.
There is no defined point in the life of a business or number of employees when it becomes time to consider your HR Strategy, however, let’s consider one element – recruitment costs. Most employers consider the recruitment cost to be around £5,000, for primarily advertising and agency costs. Whilst exact figures will vary per industry, geographical area, salary banding and qualifications, a report in 2014 by Oxford Economics, identified the average employment cost being a whopping £30,000 (Read the full article here >>). This takes account of the time invested by those involved over the 4 – 12 week recruitment period, training, induction and the time spent by the new employee of getting up to speed and full productivity. Clearly these values are likely to be even higher some two years on.
It’s useful to ask yourself these questions:
- With no HR strategy in place, how can you be confident that you are recruiting the right person?
- With no HR strategy in place, how can you be confident that new recruit will stay?
- With no HR strategy in place, how can you be confident you maximise the productivity and potential of that new recruit?
At a cost of £30,000 to re-recruit, how can you afford not to have an HR Strategy in place?
Of course, recruitment is only one part of an HR Strategy but it gives a good illustration of how a great HR strategy will reduce an SME’s costs and maximise their growth path.
Other areas where a great HR Strategy impacts on costs and growth include:
Employee Satisfaction and Engagement
The common denominator to every successful business, regardless of size, is a satisfied workforce. Virgin, Apple, Google, John Lewis – all well known for their HR strategy resulting in a high level of employee engagement. The culture they have developed of #doyourpersonalbest results in teamwork, buy-in and high-performance levels. SMEs which can develop and embrace that culture will benefit from low sickness rates, high staff retention and improved productivity. Costs, in money and time, will be reduced and the workforce will be aligned to achieving the business objectives.
Succession planning and replacement planning will ensure that investment in people will be rewarded, thereby improving customer relationships, product knowledge and innovation. A robust appraisal system, which results in identifying targeted learning and development programmes, will not only ensure employees feel valued, they will also reduce the risk of performance management issues. Investment in learning and development should be in line with the business plan and return will be seen in improved productivity. Retention will improve and recruitment will be more efficient and of higher quality.
Legal Protection and Expectations
Whether it is the formation and communication of an Employee Handbook, the updating of policies and procedures, or the recruitment and selection process, it is vital to understand that an off-the-shelf HR strategy does not work. For individuals, as well as companies, if you want to maximise growth and encourage employee participation then one size does not fit all.
With a tailored robust HR strategy not only will your business plan be achievable, both employee and employer will also be protected. Being proactive and implementing good practices is of course much more effective than being reactive and dealing with issues as and when they arise – a robust HR Strategy can minimise the risk of litigation occurring, whilst enabling you to deal with such challenges efficiently with minimal impact on your business if needed.
If you would like support forming your HR Strategy please give us a call to discuss your options. We work on really flexible terms and are a friendly bunch, really keen to make a difference to your business by finding a solution that works for you so call us on 01473 360160 or via our contact page.