The tipping point for investing in HR

When a business is first starting out, developing an HR function isn’t on the agenda. And nor does it need to be. But even in some small to medium-sized businesses with up to 250 employees, HR can be overlooked.

But what happens when organisations do recognise the need to invest in HR? Where do they start with putting it in place? And what role can interims play?

In this blog post, HR interim Hilary Pearl discusses the tipping point for businesses, what needs to be put in place from an HR perspective, and what skills are needed to be effective.

The HR tipping point

When a business is small; when the CEO knows everybody and everybody knows them, there’s a real personal feel to the company. But when a business starts to grow, it can begin to lose some of that intimate feel, and it becomes harder to run as a small company.

It’s often at this point that the need to invest in HR becomes apparent. But too often, this recognition comes a bit late. Often the real tipping point comes when something goes wrong, and they realise they need some help.

A PA may be no longer able to cope with managing contracts of employment. Or using spreadsheets to manage the people side of the business is no longer responsive enough, and it takes days to uncover data that is needed to make fast business decisions. As a business grows, there is an increasing need for data. This is particularly pertinent at the moment if we consider new regulations that require companies with over 250 employees to publish gender pay gap reports.

Attracting and retaining great people is harder too. You’re now competing with the big boys and knowing how to keep your business attractive to new and existing talent needs a strong focus if you’re going to survive and grow.

The problem is identifying these tipping points before they hit. And then knowing what to do about them.

You don’t know what you don’t know

The issue is that when growing a company, you don’t know what obstacles you’re going to hit. And when you are hit with a problem, the human instinct is to go straight to solution mode. But it’s all too easy to jump to the wrong conclusion.

If a CEO has started their own business after a long career in a large organisation, they will have a good idea of what good HR looks like and what it can bring to a company. But what works in a large corporation doesn’t always work in a small to medium-sized business.

On the other hand, if they haven’t any experience, there is a tendency to think of HR only in terms of administration, or legal and compliance. They think HR is something they need to have, but aren’t necessarily aware of why they need it or the business benefits it can deliver.

Before you can decide what kind of HR person you need, you need to consider your growth plans and the challenges associated with them. You may be in a challenging market where recruiting people is going to be difficult, or perhaps you’re planning to open offices overseas.

It’s not just about assessing the organisation on the here and now. Often the tipping point comes when an organisation is struggling to cope with resource, so they’ll bring in an operational HR person to manage administrative tasks and compliance. But the likelihood is that they’ll soon hit another tipping point when they realise they haven’t invested in developing their people, or in employee engagement. When it comes to investing in HR, organisations also need to be thinking ahead to their future business needs.

The interim's role

Once an organisation recognises a need to invest in HR, they need help and guidance in understanding exactly what they need to meet their business goals.

At this stage, it’s not about filling a role. Organisations need someone to come in who knows about how they’re going to grow, what their troubles are going to be, and who can work with them in a partnership to identify what the right solution will be for their company. And this is the role interims play.

An interims ability to think ahead and aligning your HR needs with your goals and thinking about what you'll need from HR in the future is where they are especially valuable.

Their expert knowledge and guidance means you can avoid that second tipping point where, after bringing in someone to manage the operational side, you again come unstuck when you realise you need someone to help drive employee engagement, to focus on growth, or to support you through an acquisition.

What skills do interims need?

Interims need to have successfully helped organisations navigate the same HR challenges you have. This means they need to be relatively senior, and to have worked with SMEs in the past. Just like an HR Manager from a large corporation isn’t the best option for an HRD role in a small organisation, they need direct experience of guiding similar organisations through similar demands.

Interims need to be able to understand what your strategy is, how you’re going to grow, the kind of market you are in, and whether you can develop internally or if you’re always going to rely on recruitment. They can assess all this upfront so you can bring in the right strategy and the right person to fulfil that strategy.

For all these reasons, an interim with a generalist HR background is crucial. In a small business context, interims need to be able to turn their hand to day-to-day HR operations, training and development, and reward and recognition. While some pragmatic people can do this almost instinctively, ultimately, interims need to have the experience to be able to say, this is how you’re going to grow, these are the challenges you’ll face and here’s what you need to do about it with regards to HR.