There’s a slightly awkward stage that many growing businesses eventually reach. You’ve got too many people for HR to be something someone squeezes in between payroll, ordering stationery and organising the Christmas party. But you’re not quite at the point where employing a full-time HR Manager or Head of People makes sense either.
Welcome to the HR gap!
It’s a very normal stage of growth. But it’s also one where people problems can start becoming business problems surprisingly quickly.
When Winging It Stops Working
In the early days of a business, people management tends to be pretty informal. The owner hires people. Someone finds an employment agreement. Your Office Manager keeps track of leave. Managers deal with issues as they crop up and everyone generally knows what’s going on because there aren’t that many of you.
And for a while, that can work perfectly well.
Then the business grows. Suddenly you have more managers, more personalities, more employment documentation, more performance conversations, more expectations and, inevitably, more complicated people situations. The processes that worked beautifully with five people start creaking a little at twelve. It doesn’t necessarily mean anything has gone wrong. It often just means the business has grown up.
Spot the Warning Signs
So, how do you know you’re reaching the HR gap?
Sometimes the signs are obvious. You’re spending increasing amounts of time dealing with people issues, managers are asking questions you’re not quite sure how to answer, or you’ve realised your employment agreements haven’t been looked at since everyone was obsessed with Tiger King!
Other signs are easier to miss.
Different managers start handling similar situations differently. Performance issues linger because nobody quite knows how to tackle them. Recruitment becomes reactive. Your structure has evolved organically rather than intentionally. Your Office Manager has somehow become the unofficial HR department despite HR never actually being part of their job!
And perhaps the biggest clue is that most of your HR activity is happening in response to something. Someone resigns. Someone complains. Someone isn’t performing. Someone wants flexible working. Someone needs managing.
Cue HR. Good people management should involve much more than putting out fires.
Less Firefighting, More Forward Thinking
As businesses grow, the HR conversation needs to change.
Instead of only asking, “How do we deal with this issue?”, you can start asking:
- Where are our people risks?
- Do our structure and roles still make sense?
- What kind of culture are we creating?
- Who are our future leaders?
- What do we need to put in place now to support the next stage of growth?
Those are business questions as much as they are HR questions. And ideally, you’re asking them before there’s a problem.
Do You Really Need an HR Manager?
Maybe. But not necessarily. One of the biggest changes we’ve seen in the way SMEs access expertise is that businesses no longer need to employ every capability they need full-time. Finance has been doing this for years with fractional CFOs and outsourced finance teams. Marketing does it. IT does it. HR can work the same way.
What matters is working out what level of support your business actually needs. For some businesses, it’s having ongoing access to an HR expert who knows the business and can answer questions, review documents, support managers and help deal with employee relations issues as they arise.
For others, the need has moved beyond HR support into genuine People capability. Someone who becomes part of the rhythm of the business, attends leadership meetings, coaches, manages, helps shape the people strategy, builds systems and thinks ahead about structure, capability and culture.
And some businesses simply need specialist help every now and then. None of those options is inherently better than another. The right answer depends on where your business is now and where it’s going next.
Your Office Manager Will Thank You!
We should also spare a thought for the Office Managers, Operations Managers, Finance Managers and Executive Assistants who mysteriously acquire HR along the way.
Often, they are extremely capable people. Which is exactly how they ended up with it. But asking someone to coordinate employment paperwork or onboarding is very different from expecting them to navigate employment relations, coach managers through difficult conversations, interpret employment obligations or develop your people strategy.
There comes a point where giving them proper HR support isn’t taking responsibility away from them. It’s giving them backup. And possibly removing several tabs permanently open in their browser!
Your Business Grows. HR Should Too.
There isn’t a magic headcount where suddenly you “need HR”.
A 10-person professional services business may have very different needs from a 40-person operational business. Growth plans, management capability, complexity, risk and culture all play a part.
A better question is: Does the way we currently manage our people still fit the business we have become? If the answer is “not really”, that’s worth paying attention to. Because the best time to strengthen your people foundations isn’t when you’re knee-deep in a restructure, performance issue or employment dispute. It’s while things are going well.
That’s when you have the space to build the systems, manager capability and people practices that will help keep them going well.
Mind the HR Gap
Growing out of DIY HR is a good problem to have. It means the business is evolving. The trick is recognising when what got you here won’t necessarily get you through the next stage.
You might need occasional expertise. You might need regular HR support. Or you might be ready for a fractional People Partner who works alongside your leadership team and helps drive the people side of the business. And the best part? You can get the expertise you need without committing to a full-time HR role.
At Spice, we work with growing businesses in all those ways, adding as little or as much HR capability as makes sense for where you are right now. Because your HR should fit your business, not the other way around.
Ready to bridge the HR gap?