Is Your HR Strategy Holding Your Business Back? Here’s How to Fix It

As a CEO of a small or medium-sized business (SMB), you're always juggling a million things at once. The most immediate needs, like recruiting and compliance, often get your full attention. But here’s the truth: if you're not thinking about a long-term people strategy, you’re setting yourself up for some serious problems down the line. And this is just as important for SMBs as it is for the big players.

With over 25 years in HR, including 14 years leading HR at fast-growing companies, I’ve seen it all. So, let’s talk about why HR often falls short in SMBs and how you can turn it into your biggest strength.

The Problem: HR Neglect in SMBs

1. The Basics: Recruiting and Compliance Many SMBs focus on the basics: getting people in the door and making sure you’re not breaking any laws. These are super important, no doubt, but they’re just a piece of the HR puzzle. If you stop here, your HR function is more reactive than proactive.

2. Long-Term People Strategy: MIA There are a few reasons why SMBs often skip out on a long-term HR strategy:

• Lack of Knowledge: Many CEOs don’t really know what a full-on HR strategy looks like or how it can boost their business.
• Lack of Interest: Some leaders don’t prioritize HR compared to other business areas.
• Lack of Understanding: There’s often a gap in understanding the real value that strategic HR can bring in terms of growth, culture, and keeping great employees.

3. Cost-Prohibitive Generalists Hiring an experienced HR generalist who can handle both the nitty-gritty and the big picture is often seen as too expensive. So, businesses go for a cheaper option, and that person gets overwhelmed with more than they can handle. This leads to burnout, inefficiencies, and missing out on strategic HR work.

4. The Consequence: Backed Into a Corner Skipping out on a people strategy means that when your business starts scaling, you’re not ready. You need to hire quickly, define and leverage your culture to attract top talent, and make sure your managers aren’t just winging it. Without a solid HR foundation, these become huge challenges.

The Solution: A Strategic Approach to HR

1. Understand What HR Really Is HR isn’t a one-size-fits-all deal. It’s a bunch of different initiatives and programs that need specific skills. Expecting one person to do everything from payroll to performance management is setting them up to fail. Instead, think of HR as a multi-faceted function needing various skill sets.

2. Determine What to Own Internally Figure out what HR tasks should be handled in-house. Usually, this includes:

• Administrative and Process-Driven Activities: Payroll, onboarding, and record-keeping are crucial for daily operations.
• Employee Relations: You need someone employees trust and can go to with their concerns.

By keeping these tasks in-house, you ensure consistency and compliance without overloading your HR team.

3. Partner with External Experts for Strategic Initiatives For the more strategic HR stuff like employer branding, performance management, talent development programs, and training, consider teaming up with experienced external experts. They bring the know-how you need at a fraction of the cost of full-time hires. Here’s why this works:

• Cost Savings: Hiring an external expert is often cheaper than bringing on a full-time, highly experienced HR generalist.
• Immediate Impact: External experts can jump in and start making a difference right away.
• Flexibility: You can scale their involvement up or down based on your business needs.

Follow these steps, and you'll be in a much better position to handle rapid growth. Don’t wait until you're backed into a corner—start building your HR strategy now to ensure a smooth, scalable future.

Making Talent and People Programs a Competitive Advantage

Investing in HR and talent programs early on isn’t just a nice thing to do; it’s a strategic move that can drive revenue and save costs. Here’s how:

1. Attracting and Keeping Top Talent A strong employer brand and effective talent development programs make your company more appealing to top talent. This cuts down on recruitment costs and turnover, ensuring you have the best people to push your business forward.

2. Boosting Employee Productivity Well-designed training and development programs improve employee skills and productivity. This leads to better performance, higher quality work, and more innovation—all of which boost your bottom line.

3. Reducing Risk Compliance isn’t just about avoiding fines; it’s about creating a safe, respectful, and inclusive workplace. Good HR management reduces the risk of costly legal issues and enhances your company’s reputation.

4. Improving Management Effectiveness Effective HR strategies ensure your managers are well-trained and equipped to lead their teams. This not only improves employee satisfaction and retention but also drives better business outcomes through strong leadership.

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HR isn’t just about hiring and compliance; it’s about building a strong foundation for your business’s growth. By understanding the full scope of HR, focusing internal resources on admin tasks, and partnering with external experts for strategic initiatives, you can turn your HR function into a competitive edge. As a CEO, it’s up to you to invest in your people and processes today to secure your company’s success tomorrow.

Embrace a strategic approach to HR, and watch it drive revenue, cut costs, and set your business up for long-term success. Remember, the best time to build a robust HR strategy was yesterday; the second-best time is now. Don’t wait—start investing in your people today.

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