Common HR pitfalls of small firms

Small firms are under great pressure to meet a multitude of business demands despite their limited resources. Adding to the challenge is the need to comply with relevant legislation or face hefty penalties otherwise. When things are running smoothly, it might be easy to overlook key human resource (HR) requirements, which could significantly affect growth. Here, we look at four common but easily avoidable HR pitfalls of small firms.


1. Non-compliance with local labour laws

A small firm may be at risk of non-compliance with local labour laws if it overlooks this issue in the process of pursuing growth. By engaging a professional HR consultancy firm to handle routine HR processes, it can focus on strategic activities and be assured of compliance with the latest employment regulations.


2. Mismatch between employer’s and employees’ expectations

All successful businesses have clear goals and expectations. If these are not clearly communicated to all staff, there would be a mismatch between the employer’s and employees’ expectations, leading to confusion over key performance indicators. To avoid this situation, the employer has to be clear about what is expected of new staff before recruiting them and ensure that promising job candidates know precisely what they have to achieve if hired.


3. Spending too much time on manual processes

A small company may be reluctant to invest in automation for its HR department due to limited financial resources and remain heavily involved in time-consuming manual, routine processes. However, automating such processes can greatly improve efficiency and allow HR professionals to focus on strategic activities instead. Furthermore, the company may consider investing in an affordable cloud-based HR management system to manage routine processes with ease anytime, anywhere.


4. Non-HR professionals handling the HR function

Some small businesses seek to manage manpower costs by hiring non-HR professionals who are responsible for the HR function in addition to their primary duties. Such professionals may have little or no knowledge of human resource management, resulting in a skill gap that could negatively affect business performance. A possible solution would be to outsource the HR function to a reputable HR service provider.


By avoiding these common pitfalls, small firms would be in a better position to enjoy significant cost savings, greater productivity, and peace of mind over compliance with labour laws, while focusing on their core business. They would also be able to enhance staff performance and boost morale.


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