The big HR mistake most small business employers make

There is an old saying that prevention is better than cure. Yes, it’s trite – but it’s also broadly true. Especially when it comes to employee relations.

If you’re busy running a small business, productivity is king. Winning customers, delivering your product or service, recognising revenue, driving growth and so on.

It’s no surprise that these tend to be a top priority – if not the top priority – in your normal business day. It can feel hard to find time for anything else!

Taking a proactive look at employee relations? Probably not even on the radar. In this article, I’ll share my thoughts on why this could prove to be a costly mistake.

Is HR on your back-burner?

Throughout my career, I have met leaders at many levels. From small business owners to line managers in larger companies through to VP and C-level enterprise leaders.

I often encounter the misconception that HR is only about administering employee-related transactions; i.e. handling the paperwork and processes associated with hiring, terminating, holiday and sick leave, etc..

In such cases, I establish a conversation where we explore the many other values that HR brings to a business. For example, helping the business with its employee relations and employee engagement.

Almost everyone understands that motivated employees perform better. This, in turn, delivers improved business performance – something valued by every business leader that I’ve met so far!

This illustrates why HR activities like employee relations and employee engagement are so important.

But, while small business leaders may understand this is important, taking any proactive action on employee relations is not seen as a priority.

With their focus on day-to-day business operations and productivity, employee relations tends to go on a back-burner.

Something to do later.

All too often, this back-burner ends up being out the kitchen door, down the path and on a rusty camping stove at the end of the garden!

Instead, many businesses tend to deal with employee issues only when they arise.

It could be a problem with an individual employee, e.g. a performance issue or complaint. Or it could be something broader, like managing a change in the business that affects multiple employees. Either way, there’s a tendency to only tackle a problem once it has actually become a problem.

And that is the big HR mistake they’re making. Failing to proactively manage your employee relations can be costly. Let’s look at why…

The costs of reactive management

There are many potential cost consequences for managing employee relations in a reactive manner. Here are some of the major ones.


The first cost is one of time. You’re going to have to take time away from running your business operations and instead focus on understanding and resolving the employee issue.

By the time the problem has escalated to the point that you’re forced to deal with it, it’s likely to have grown in complexity. You’ll need to review and understand the background to the problem. That means even more time away from productive business!

Working relationships

The second cost is the impact on workplace relationships and culture. If dissatisfied by something, most people strongly believe they have good cause (whether you agree or not). By the time a situation escalates, they have often become so emotionally invested in their issue that they struggle to accept anything but a positive outcome in their favour.

In such cases, it’s much harder to reconcile differences and resolve problems. This can cause real damage to working relationships, not to mention taking even more time to manage.

A workplace conflict can be really uncomfortable – or even downright toxic, especially in a small business environment.


This brings us to the third cost – attrition. Nobody wants to stay in a job where they’re unhappy, demotivated or where there’s a bad atmosphere.

If we’re talking about a problem employee moving on, that might not sound like a big deal. But other employees are observing how you handle things too. If you mishandle change or inadvertently create a corrosive culture, you’re going to end up losing good employees too.

Attrition not only disrupts your business productivity, you again have to spend more time in recruiting and selecting replacements.

Financial impact

Finally, we have a cost in terms of your bottom line. For example, if you have to hire an HR professional to manage a situation for you there will be some cost associated with this. How much cost often depends on how late you engage them for help and how difficult the situation has become.

That’s not all. Should you need an employment lawyer because, say, someone is taking you to an Employment Tribunal, this is could result in some very hefty bills…even if things resolve in your favour.

Be proactive

And so I return to my opening point; prevention really is better than cure. In many cases, you will know an issue is looming on the horizon. For example, you know there’s a change you need to make in the business or you’re aware that there’s a developing issue with one or more employees.

All too often, especially where there is the potential for discomfort or difficult conversations, we put off dealing with things. We hope they’ll somehow resolve themselves, or we kid ourselves that by dropping a few oblique hints, folks will get the message.

This almost never works out. Early intervention is always the best approach. It will be easier to manage and you will have a much greater chance of resolving the issue satisfactorily. It also means you can get back to running your business quicker. Plus, of course, you are likely to minimise the various costs described above!

I wish I’d come to you sooner” is something we commonly hear from clients. So, don’t be reluctant to reach out, ask questions and get advice. We’d like nothing more than to help businesses be more proactive with their employee relations issues.
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