5 HR challenges faced by growing businesses

Employees are one of the greatest assets of any fast-growth business - citrusHR's Georgina Read advises on how to keep your staff on side

For growing businesses, HR might not seem like the most important thing to think about – in fact it’s the opposite.

Your staff will be perhaps the most vital part of your organisation and, as such, it's essential you get your management right from the very start.

However with little time to devote to HR, and even less to double check it's all in order, new and growing businesses encounter the same issues all the time when handling their HR.

Make sure you're aware of these five common HR challenges:

Compliance and contracts

Compliance with employment law is a real struggle for smaller employers. Without a dedicated HR department, or the resource to outsource HR, staying up to date with employment law can seem almost impossible.

With small changes being made to processes, and employment tribunals raising new questions almost every week,  you could soon find you're really behind. It's not necessarily your fault, that's just the way it is.

For example, did you know that you can be fined up to £20,000 for every employee you take on that doesn't have the right to work in the UK? And do you know how you're supposed to make the right checks?

Furthermore, when it comes to employment law, employers often struggle to ensure that their employment contracts are up to date with the latest developments. Having contracts checked by employment lawyers may seem expensive and over the top, but there isn't really much choice for small employers otherwise.

And when you have just two months to issue one after a new member of staff is taken on, it can feel like the pressure is on to get something sent, even if it’s not entirely up to date. But it is essential to make sure your contacts are up to date, not just for you but for the peace of mind of your employees too.

Holiday calculations

It might seem straightforward, but giving your staff their statutory 20 days holiday every year can lead to a lot of paperwork.

Many employers choose to keep track of holiday requests through printed spreadsheets and email based request systems. However this can just add to the time burden that holiday calculations bring with them, when there are quite a few options out there to help manage holiday calculations all in one place.

Trying to keep track of holiday requests can be a real pain, and that's before you start to calculate holiday for part-timers or staff who leave part way through the year.

Staff turnover

It might be due to poor performance, lack of staff engagement, or even just staff getting a better offer elsewhere (it happens!); whatever it is, staff leaving a business can be a real drain on resources.

Instead of being able to spend time growing your business further, business owners are left looking for, and training, new staff members. According to Oxford Economics the cost of a new hire can be over £30,000 with the majority of these costs down to a loss of productivity in the time in takes to source that new hire.

What employers don't often realise is that you can do more to retain your staff. Whether offering more benefits to staff working for you already, or training them up properly in the first place, business owners often have more control when it comes to staff turnover than they may realise.


Redundancy is the word that no business owner ever really wants to contemplate but small businesses often tread a fine line when it comes to taking on staff.

If the situation changes, you'll quickly realise that you can't afford to keep staff on and it can therefore be necessary to make redundancies to ensure the continued success of your business.

However, many smaller employers aren't always aware of the correct process to handle redundancy. As with legal compliance, sometimes you just don't have the time to look up your options, and without professional help you could make the wrong decision which leads to more issues further down the line such as an employee tribunal.

Outsourcing your HR

Outsourcing isn't directly a HR issue in of itself but it's certainly something that impacts on how your growing business conducts its HR.

Knowing whether to keep your business' HR internal, or to recruit external help, is a crucial decision for a small employer. But, as with most things, it comes down to cost and commitment.

Often employers just don't see the benefits to the ‘done-for-them' HR consultants that lock them into a long term contract. That's not to say there are none; knowing that your HR is covered for the next few years without even having to think about it is a real benefit for a growing business – as we've seen above.

However, if your only options are to outsource to a large organisation, a small consultancy that will charge a retainer, or to try to do it yourself – most businesses will go with the last option. They won't realise why people go for these retained services until something goes really wrong.

Like with other industries such as accountancy, there is also an increasingly wide range of online services now available to help you manage your internal HR. These enable employers to manage their day-to-day internal tasks using online tools much more effectively than they ever would have before, which eliminates many of the day to day errors that smaller employers can make.

HR will always be a challenge for small and growing businesses – and any business really – after all, it's about dealing with people; who are rarely predictable!

Growing businesses shouldn't let HR become a pain and if you keep on top of it you'll have a real handle on your greatest asset – your team.

Georgina Read is co-founder and director of citrusHR, the simple HR support service for small businesses.


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