Last year was one of the toughest for businesses with almost 27,000 British companies going bust as a result of the recession, more than in any other economic downturn and although Britain may be on its way out of the recession, 2010 is going to be another difficult year to get through.
SME organisations in particular are under increased pressure to perform and need to focus their time and attention on securing a successful future for the business. However, recent research from Croner shows that many SMEs are spending too much time dealing with legal and regulatory issues, negatively impacting on crucial areas of business development. It’s obviously important that companies comply with HR and spend time managing their staff, so what can they do to better manage their HR processes, freeing key people to attend to the core responsibilities of the business?
A recent survey conducted by Croner among those working in SME organisations, including CEOs, MDs, finance directors, operations directors, line managers, HR managers, PAs and secretaries, shows that one in 10 are spending up to 15 hours or two days a week managing HR issues. SME organisations revealed that dealing with red tape and regulations (40%) and health and safety (19%) were the most time-consuming activities, with other necessary activities such as managing employee performance, monitoring absenteeism and logging holiday leave also distracting them from their core job.
Unsurprisingly, spending so much time on these necessary activities is having a negative effect on businesses, with three quarters of CEOs and MDs citing new business development and customer service as the most likely areas to suffer as a result. While it’s important that businesses spend time on HR and adhere to certain processes, it shouldn’t be at the expense of business survival and expansion.
The research also shows that well over half (60%) of those in SME organisations actually have no formal HR training, with a quarter of people revealing they are not sure whether they are always taking the right steps. They are concerned that if they get certain processes wrong then the company could face an employment tribunal claim. But a quarter admitted to receiving no external HR support to help them comply with employment legislation, with one in ten simply relying on a trawl of the internet for help.
But with the British Chambers of Commerce’s recent revelation that another 18 British employment and tax regulations are due to come to force by 2014, SME organisations cannot afford to be left in the dark where HR legislation is concerned. Our research shows that companies are already under increasing pressure to adhere to legislation and enforced new regulations will only add to this. Companies must look at new ways of simplifying their HR and other compliance activities or their people are in danger of becoming swamped by red tape.
Companies can look at a number of ways to reduce time and money spent complying with business regulations. These could include recruiting a dedicated HR professional to deal with such issues. They could also look at training and up-skilling certain members of staff, however, employment law is a complicated area and getting it wrong can lead to severe costs for the business. Another way to manage HR is to implement a software service which reduces time spent on HR administration and also provides businesses with necessary support and guidance to help them navigate through tough employment and regulatory issues.
Too many SME organisations end up spending a lot of time and effort, and more often than not money, sorting out HR related problems which tend to happen because they are either not aware of the pitfalls of particular actions or, as our research shows, because they rely on the use of paper files (31%).
With the right tools, guidance and support in place, dealing with business regulation doesn’t have to be a distraction from the core activity that will drive and develop a business. Online HR systems can help streamline administration, reducing time and money spent complying with regulation, while also helping businesses get the practical advice and guidance they need to minimise the risk of issues developing.
Richard Smith is Head of Service Development at Croner www.croner.co.uk/simplify
