From leaving it too late to dusting off an old contract found online, HR mistakes can prove costly for growing businesses. Kat Derbyshire, founder of Black Kat HR, highlights five common traps SMEs fall into – and how to avoid them.
When you’re running a small business, HR might not be at the top of your priority list. There are customers to look after, finances to manage and, hopefully, plenty of work coming through the door.
But employing people brings responsibilities from day one, and putting HR on the back burner can create much bigger problems further down the line. Here are some key mistakes I regularly see growing businesses make.
1. Thinking you’re too small to worry about HR
One of the most common things I hear is: “We’ve only got one member of staff, so we didn’t think we needed HR.”
Unfortunately, it doesn’t work like that. Whether you employ one person or 100, you still have responsibilities as an employer. Your first employee needs an employment contract and you need to understand the rules around employing them.
That doesn’t mean a small business needs to immediately recruit an HR manager. It means having access to the right expertise from the point you start employing people. Most business owners aren’t employment law experts, and often the biggest risk is simply not knowing what you don’t know.
2. Borrowing contracts and policies from elsewhere
Another mistake is using documents that weren’t created for your business. They might have come from the internet, another business, a previous employer or been generated using AI.
There’s a misconception that a generic employment contract exists that will work for everybody. It doesn’t.
I once worked with a business using a contract that required an employee to have a DBS check, despite there being no reason for one in that particular role. When the employee questioned it, the employer couldn’t explain why it was there.
Your contracts and policies need to reflect how your business operates and what an individual actually does. Think of them a little like car insurance: you hope you’ll never have to rely on it, but if you do, you need to know it’s fit for purpose.
3. Creating your HR documents – then forgetting about them
Having the right paperwork is only the beginning. Employment law constantly changes and businesses evolve, so contracts, handbooks and policies will need reviewing too.
I often see businesses that had excellent documents produced five or even 10 years ago but haven’t touched them since. They were right at the time, but that doesn’t necessarily mean they’re right now.
Keeping an employee handbook digitally rather than printing copies makes this much easier. When something changes, it can be updated centrally and employees can be directed to the latest version.
4. Giving HR to someone because they’re already there
HR often gets added to somebody else’s job. It might be the finance person, PA or office manager who suddenly finds “HR” added to their responsibilities.
Having an internal point of contact is useful, but expecting someone without HR expertise to handle employment law is a different matter. If somebody asked me to do their accounts because I run an HR business, I’d say absolutely not – I wouldn’t know where to start. The same applies in reverse.
This becomes particularly important when difficult situations arise. If you need to manage redundancies, a grievance or a disciplinary issue, suddenly asking someone without the relevant expertise to handle it puts a lot of responsibility on their shoulders.
5. Waiting for a problem before getting help
Ultimately, good HR should be proactive rather than something you turn to when a situation has already escalated.
Putting proper contracts and policies in place forces you to think about how your business operates. What happens when someone needs a particular type of family leave? What is your disciplinary process? How should an employee raise a grievance?
Going through that process can be an education for the employer as much as the employee. You understand your obligations, your team understands how things work and everybody knows where to find the information when they need it.
You might not need a full-time HR professional, particularly while you’re growing. But you do need access to the right expertise.
Because if something does eventually reach an employment tribunal, “I didn’t know” isn’t much of a defence.
For support with contracts, policies, employment law and everything in between, Black Kat HR helps businesses take the headache out of managing their people. Contact Kat and find out more at blackkat-hr.com.
