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Do small businesses even need a HR Strategy?

Jennifer Ritchie . Monday, July 18, 2016
Do small businesses even need a HR Strategy?

You may ask do small businesses even need a HR (or people) strategy?  I believe that small businesses with as few as 10 employees should have a people plan.  It would be difficult to achieve your vision and desired success without having an overarching business strategy.  Similarly, how will you ensure you have the right talent, capability and leadership without a HR strategy?

The development of a HR strategy will provide a roadmap that ensures you adopt a consistent approach to hiring, developing your people and ultimately meeting the demands of your customers.  As your success is driven by your people it makes sense to have a strategy that provides direction for them.

The link between HR and your business strategy

It is commonly believed that linking your human resources strategy to your overarching business strategy leads to improved competitiveness in the marketplace.  To consider it in isolation then would mean you may miss the impact your HR strategy has on the financial, technological and other resources in your business that are interdependent with your human resources.  Accordingly it makes sense to review all these areas as part of a holistic process.

External factors

Understanding the external environment enables you to make HR management decisions now that align with the future direction of your business. Changes to the social, economic, technical and political environment all need to be considered, as well as scanning the competitive environment to understand what your competitors are doing.  You can then determine where your threats and opportunities are and build your strategies accordingly.  For example, will the roles required today be the same as those required in the future?  Do your current employees have the knowledge, skills and abilities to fulfil the future roles or will you need to re-train or hire people with those skills? 

If your business is expanding rapidly you will need to take a different approach to hiring than if your business was going through a period of contraction. For example, you may need to recruit another person but instead of hiring a full-time permanent employee, you could hire someone for a fixed term or employ a casual employee which gives you the flexibility to adjust hours depending on the needs of your business as it goes through the inevitable peaks and troughs of business demand.

Costs

By spending the time developing a HR strategy you will also shine a light on future costs associated with the people side of your business such as recruitment, training and compliance so they can accurately be included in your operating budget.  Reviewing your strategy periodically will provide the opportunity to adapt your strategy to ensure continual alignment to any change in your business circumstances.

It all comes down to having the right people

However, having great strategies alone will not guarantee success.  It is the people within your organisation who have to implement them and believe in the direction your business is heading.  As Jim Collins said in his 2001 book Good to Great:

Those who build great organizations make sure they have the right people on the bus and the right people in the key seats before they figure out where to drive the bus.  They always think first about who and then about what.  When facing chaos and uncertainty, and you cannot possibly predict what's coming around the corner, your best "strategy" is to have a busload of people who can adapt to and perform brilliantly no matter what comes next.

Contact us at Ritchie Human Resources to develop people strategies that will help build your business. 



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