Five Most Common HR Mistakes That SMEs Make

By Gemma Creagh - Last update

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Human Resources (HR) managers and professionals face particular challenges in terms of running an effective HR strategy in a team that is small and often multidisciplinary. No matter the size of your organisation, effective HR management is needed in order to meet consumer demands and to enable the smooth running of the business. Let’s take a look at five of the key HR mistakes that are common occurrences in a small-to-medium enterprise (SME).

5 Top HR Mistakes

Not Having a Clear HR Strategy

If you don’t create simple organisational tools like an employee handbook then your HR environment is going to be a lot more challenging. The best way to ensure that those working in your organisation are properly informed with processes and regulations is to devise an employee handbook/briefing that is clear and easy to understand. It should cover aspects such as:

  • Code of conduct within the organisation
  • Protocols and policies relating to the use of IT in the workplace
  • What employees are entitled to in terms of benefits, holidays, sick leave etc etc
  • A disciplinary and reporting procedure
  • Termination of employment and retirement protocols etc

No matter the size of the business, you do need a strategy, whatever the scale. Often HR is neglected in smaller firms and emerging businesses and this can cause a lot of problems down the line. Primarily this is due to the fact that, according to UK data, 90% of company founders come from engineering, sales or finance backgrounds and have little knowledge or an underdeveloped appreciation of what HR actually involves and how fundamental it is.

Not Managing Performance

For SMEs it is very important to monitor and maintain a record of any performance related issues, to ensure you can maximise the potential of any employees within your organisation, but also to ensure you are legally covered for any performance or behaviour related issues that may lead towards warnings, suspensions or eventual termination. IT should be clear to the employee what they are expected to perform and achieve within the company and what supports you can provide to help them to their job and overcome any problems or obstacles.

Not Following Procedures

Like every aspect of the law, employment law is governed by procedure, and your own processes need to follow a particular procedure. SMEs need to be aware of their legal obligations, and how to navigate disciplinary or selection processes properly or they can run into problems of the expensive legal variety. Unless it’s a case of gross misconduct, such as criminal behaviour, assault or abuse for example, when you can proceed to a formal dismissal once you have evidence, you need to provide two formal warnings to the employee about their performance or behaviour. A first written warning should be valid for three months and if the employee doesn’t improve then you can either send a second warning or a formal final warning. If at least two formal warnings have been issued, and if no improvement has been noted, you are then entitled to dismiss the employee.

All of the reasons behind the dismissal must be made clear and you should be given a formal letter of dismissal too in which it is usually possible to appeal the decision within 14 days. If you don’t give reasons formally and abide by the process then you could find yourself in the employment appeals tribunal or labour court. Familiarise yourself with the process in detail by visiting . You also need to be vigilant and firm in dealing with any malpractice or bullying within the firm, such a culture quickly becomes toxic and you will lose good people, whether they are directly involved in such scenarios or not.

Not Leading by Example

If you have rules, you need to have the authority and courage to enforce them to avoid the worst HR mistakes. For example, if someone is late consistently, you should have the means to make them subject to disciplinary action if necessary. This should be within their contract, for example saying that four latenesses in any calendar month would mean an informal or formal warning on their conduct might be issued. If you have rules like this clearly in writing, but then do not enforce them, it can provide the perception that you will not enforce other rules and may denigrate your position as a leader, as well as that of other senior people within the firm. Small companies do not want to get mired in disciplinary procedures and actions but you need to have a structure in place and authority in place to abide by that structure, so you can create a positive culture that knows the rules and sticks by them, focussing on what should be a priority, growing and sustaining the business.

Not Providing Training and Development Opportunities

No matter the size of the company, all those working there want to grow and progress professionally through the course of their work. The importance of Continuous Professional Development (CPD) has never been a more vital part of the employer/employee relationship. Through providing training and development opportunities for staff,  employers show they value the skills and potential of their employees. Of course, cost is always an issue but there are group training exercises that you can all do together, even team bonding events can count as CPD in many cases, and there is an increasing range of online training, webinars and live streams that can provide expertise, advice and support to a particular aspect of your business. If you neglect this area, employees will quickly see a glass ceiling or a dead end in terms of their careers and you may lose some of your best, or potentially best, people.

Gemma Creagh

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