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This article was co-authored by Professor Ben Lupton, Professor Carol Atkinson, Dr Anastasia Kynighou, Dr Val Antcliff and Dr Jackie Carter. 

Small employers account for nearly half of all employment and business turnover in the UK, and their performance is key to driving productivity and growth in the economy. Good people management lies at the heart of this, yet the HR challenges that small businesses face have received much less attention than those in their larger cousins.

Smaller businesses are rarely in a position to employ HR specialists, and often lack the expertise and resources to identify and adopt the best HR practices.

Finding ways to help small businesses to make the most of the skills of their workforce is emerging as a key priority for policy makers.

Learning from a National Pilot Project

The lessons learnt from a national pilot project – “PeopleSkills” – that provided HR support to the small business community are outlined here.

The project was funded by the JP Morgan Chase Foundation and delivered through the CIPD with the support of a local partner (local council or chamber of commerce). In each of three pilot locations – Glasgow, Hackney and Stoke-on-Trent – small businesses were offered free HR advice from independent HR consultants.

This involved an initial telephone consultation and one or more site visits. Over 400 small organisations received advice and support.  The project was evaluated using surveys, interviews and case studies.

Face-to-face, tailored, HR support makes a difference

Small businesses welcomed the fact that the advice was free (naturally!), but perhaps even more so welcomed the way it was delivered.

Finding information about HR (e.g. employment law, good practice) wasn’t difficult for small businesses, but knowing which bits were relevant to their business and how best to apply them was a challenge. Being able to sit round a table with an expert, who could make suggestions and share ideas was seen as particularly valuable.

The results show that businesses were considerably more confident about their productivity and workplace relations after having received this support.

Addressing even basic HR issues can have a big impact

Most of the businesses sought support for matters that many larger, well-resourced, organisations would be regarded as routine; for example, help with contracts of employment, job descriptions, maternity leave.  However, getting these issues sorted out helped organisations feel that they were operating on a much more secure footing, and freed up time and energy for them to devote more of their attention to developing their business.

For some organisations, addressing basic HR issues was a foundation for more transformational HR interventions. In these cases, owner-managers felt confident to develop performance management systems, recruitment strategies, and in one case, a learning academy. 

The lesson here is that in supporting small businesses, focussing on the basics is important in its own right, but it can lead to much more.

Engaging small businesses with HR support programmes is a challenge

We found that while smaller organisations were often ready to seek support in relation to finance and legal matters, they were less inclined to do so with HR issues.

Partly this reflected a lack of awareness of the difference that good HR practice can make. For example, we found that where owner managers had worked previously in large organisations, they were aware of what good HR could achieve, but where they had not had this exposure they were often unaware of what HR was, and what it could do for them.

Many who had taken HR advice previously had done so from their accountant or solicitor. Those that did seek advice through the project were often triggered to do so by an immediate issue or problem, and had no desire to develop their approach to people management beyond solving that (though as noted, this often changed in discussion with the consultant).

And of course, these are only the businesses that did engage with the project – many more evidently chose not to benefit even from the free HR advice available.

However, the difficulties in engaging small businesses with HR support also reflected a lack of awareness of what support was available. There was a general view among small businesses that the  business support ‘landscape’ was difficult to navigate, and quite fragmented.

It was not clear where to go for support or how to access it. Businesses that were well connected in local networks were more likely to engage with the support offered, but many of the referrals came through word of mouth, and there is a concern that the more isolated businesses may be missing out on valuable support and advice.

There are two lessons here. Firstly, to get greater engagement from businesses with HR support, there is a need to raise awareness of the potential for good HR to make a difference.

This message is well understood in most larger organisations, but is not necessarily the case in many smaller ones. Secondly, a simpler, one-stop local business advice/support service is likely to fare better than a disparate range of offerings.

Conclusion

While some small organisations are undoubtedly beacons of good employment practice, it is almost certainly also true that many others struggle with people management challenges.

Given their resource and time pressures, and lack of specialist expertise, this is understandable. The concern is that this leads to an under-utilisation of skills and potential, which in turn impacts on productivity in this large and important sector of the UK economy.

Finding ways to support small businesses with their HR challenges is an important element of the productivity agenda. 

The results of this project suggest that, face-to-face, bespoke HR advice can make an important difference. However it also revealed the continuing challenges in helping small businesses be aware of the benefits of good HR practice, and of finding ways to encourage them to access it.

If you would like to find out more, the full report on the pilot project can be found at https://www.cipd.co.uk/knowledge/strategy/hr/hr-capability-small-firms