HR services for small businesses: What are the benefits?

By Henry Williams on Small Business UK - Advice and Ideas for UK Small Businesses and SMEs

In large businesses, Human Resources (HR) plays a vital role in managing and getting the best out of employees. But for many small businesses, taking on even more staff to look after your existing staff is neither affordable nor practical. 

However, a complete absence of HR can lead to lost talent, underperforming employees, resentment, and a poor company culture. 

That’s where HR services for small businesses come in. Combining software with expert advice and support, HR services can reduce time-consuming admin, boost productivity and job satisfaction amongst your staff, and free you up to focus on growing your business. 

Below, we explain the key benefits of HR services for small businesses.

Save money

HR software generally costs between a few quid a month to a few hundred quid a month. As you usually pay per employee, you know that you’re only paying for what you need, and, when you consider that the average salary of an HR executive is £30,300 a year in the UK, you’re looking at a major cost saving by outsourcing your HR requirements instead of hiring someone permanent. 

Less directly, better HR improves employee retention, which saves on recruitment costs; it can perform multiple functions simultaneously while reducing human error, which saves on admin costs; and it can help you stay compliant, which avoids legal fees and penalties (more on all these below) 

Save time

HR services significantly reduce the administrative workload of you and your staff. Tedious, and time-consuming tasks are made significantly easier by having multiple functions and all employee data centralised in one easily accessible system. And as everything is in one place, from leave and absence to expenses, disciplinary, and more, you don’t have to waste time switching between different platforms.

For example, you can use HR software to simplify and speed up your payroll process by automatically exporting all your essential payroll data and uploading it in a usable form into your payroll system. 

What’s more, you can create multiple user accounts and set permissions, meaning each member of staff is able to login, find any data they need, submit requests, and take care of their own HR admin. Any requests will automatically go to the relevant party, and senior team members don’t have to spend their precious time doing things that could easily be done by their direct report. 

Improve employee performance and retention

Ensuring your employees are both happy and productive is vital, but finding the time to do it alongside everything else can be challenging. 

With HR software, you can create onboarding plans that help new employees get settled in and outline expectations, so that they know what’s expected of them and can have a positive impact on your business from day one. 

HR software also allows managers and direct reports to set KPIs and objectives, arrange regular 1-2-1s and appraisals, and monitor performance, which ensures everyone stays on track with personal and business goals.This can foster a culture of feedback, which improves transparency, boosts team morale and recognises excellent work.

Likewise, allowing the entire team to see in detail how their activities contribute to the wider commercial objectives of the business gives them a sense of purpose and satisfaction. 

You can also create development plans, learning resources, and training modules within the software that everyone can access, which gives employees the tools to keep learning and improving autonomously during their time at your company. More engaged, more highly skilled employees are more likely to stick around and help your business grow. 

Stay compliant

Staying on top of legislation can be a challenge, but failing to do so can be costly. Your HR software should meet the highest security standards of GDPR compliance and allow you to adjust the privacy and sharing settings so that you can control who has access to what information. 

Additionally, if your HR service offers outsourced support from experts, you know you’re in safe hands when it comes to those tricker or more complex legal and employment challenges. 

By helping you to stay on the right side of data protection regulation, a safe and secure HR system reduces the chance of a data leak resulting in crippling GDPR fines and reputational damage. 

Likewise, as HR software makes it easy to manage and track holiday requests and entitlement, and as it keeps a record of employee responsibilities, disciplinary, and performance matters, it can help you to avoid falling foul of employment law and can provide evidence in your favour if something does go wrong. 

Next steps

HR services can take the headache out of many of those day-to-day aspects of running your business that are absolutely essential but often challenging or tedious. You can perform multiple functions and centralise employee records in one place, which can save you time and money. You can also improve your company culture, and ensure everyone is recognised for good work and held to account when they need to improve. 

The best thing is, it’s much more affordable than a full-time HR employee, can work round the clock, and doesn’t need to be praised, disciplined, or given any holiday.

Want to compare prices from all the best HR services providers? Why not use our free comparison tool to be matched with the most suitable company for your needs.

Simply fill in our free quote-finding form, and answer a few questions about your business (it takes less than a minute). We’ll match you with the most appropriate HR support and software provider.

Further reading on HR

Six HR mistakes start-ups make and how to avoid them
Small business HR checklist

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