Three major issues that simultaneously impact small businesses are presenting a significant long-term risk.

1. The HR Profession’s decades-long tactic to earn a permanent ‘seat at the table’ of big-business means that tomorrow’s HR professionals are drastically under-developed to be able to service small business employers.
2. Small business’ traditional mistrust, dislike, and evasion of introducing HR skill into their business means their capability gap is too large to develop quickly enough to deal with a extremely motivated workplace regulators.
3. The current (and future) regulatory regime now hitting Australian workplaces demands that small businesses operate almost on-par with large employers who have dedicated teams of legal and HR professionals.

It’s the perfect storm.

Let’s shine the spotlight on something that needs to be transparently reconsidered. Small business employers and the HR Profession despise each other.

Why?

For small business owners, the term ‘HR’ shutters their spines, and the thought of introducing expensive HR people to their business presents an enormous risk. It is often (correctly) assumed as a contest to the small business owner’s way of working, free-thinking, and entrepreneurial approach, and creates fear that HR bureaucracy will destroy a loose and flexible working environment.

For HR folks, a small business rarely provides any real career path suitable to the dogged vision of domination in the HR profession, the HR professional will rarely gain any authority to ‘improve’ operations, and the small business environment has traditionally required minimal HR interference (operationally).

The effect?

These two parties, understandably, have become separated, disinterested, and grown apart from one another, year after year, decade after decade.

The HR Profession is largely to blame:

The HR profession has become fixated on their feelings and self-worth. It wants to be assured it is valued and wanted. It believes that HR advisors deserve “a seat at the table” in board rooms, side by side with the organisations most important decision makers, influencing everything they can get close to.

And they may be correct, a lot of the time. The right HR people can cause great effect.

So, why are they so far apart from small businesses?

HR people typically come from high school into HR school, then to a larger employer’s HR department, and usually only depart to move onto another larger employer. Why? Because the businesses that benefit from and can afford the luxury to run HR career pathways are typically larger employers, with more than 200 employees.

So, why are large employer working environments so different, and what type of professional capability do they develop in a HR person?

1. HR professionals in these businesses rarely pay attention to Modern Awards and employment legislation, if they do, that attention is only relevant to a portion of the workforce and the management of that workforce portion is often decentralised away from most people in the HR team – unless a HR initiative includes inclusion of that workforce.

• • This means the ongoing, constant changes to Modern Awards, and Commission decisions about Award interpretations are, at best, peripheral to the HR professional in these working environments.

2. Larger employers with HR departments have the capacity to design and implement policy-based workplace relations. This is great for the business, but the impact this has on the all-round development of a HR pro can detrimental.

• • At first, if a HR person is gifted the opportunity to design and implement this policy driven operating model, they’ll (hopefully) understand the importance of consultation with commercial leaders and develop some skills in functional organisation design. But the outcome of this, is the establishment of “the way” we do things. This turns HR people into guardians of “the way we do things”, and I haven’t come across many HR people that are open to being challenged, and interested in setting aside egos in the interest of change and improvements.
  • Subsequently, we end up a HR team who become experts in how one particular workplace operates forcing them to ignore (to their detriment) the individual knowledge development opportunities offered by the external world, where new ideas, new operating models, new challenges, are happening around us every day.

3. Large employer HR teams are not established to operate where everybody in the team is equally exposed to the business’ most impactful scopes of work. Typically, low-level HR people will work on HR administration, Recruitment coordination, time and record keeping, document control and filing, with the advisory level partnering up with leaders in the business primarily to ensure appropriate and consistent execution of the company’s policy positions in any volume of matters they face. Then, the senior level HR professional/s is essentially handing down instructions and acting as the escalation point for the more problematic issues and guidance for senior leaders.

• • This results in isolated skill development, and we’ve seen this model of operating turn HR into a fragmented team of “specialisations” that reflect the lifecycle of an employee.
    • Recruitment & selection (Recruitment Advisors)
    • Employee and Team Performance (HR Generalists)
    • Learning, Training & Development
    • Organisation Development & Design
    • Compensation and benefits (sometimes joining mobilisation and payroll in a shared service model)
    • Human Resources Information System, data and analytics
  • The HR profession is moving further away from the allrounder, generalist model where it once serviced its stakeholders, to preferring the specialist model of HR practitioners, and business partnering. This means HR now creates tools and provides instruction, placing the onus of HR execution back onto the shoulders of the leaders in the business.

What does all of this mean for Small Business in Australia?

1. Over the next decade, we’ll see more regulation in workplaces, and smaller businesses will no longer be an excluded Party to these legal amendments. The holiday-period smaller employers have enjoyed for some time is certainly coming to an end.
2. Small business employers are now entering a phase of over-regulation, and the fact that Small Businesses and the HR profession have ignored each other for so long means small businesses are not equipped to even understand the environment they’re about to play in, let alone survive and thrive in it.
3. Tomorrow’s HR consultants are employed in larger businesses today. There is a compounding capability issue, where HR professionals (for at least the last 15 years) are no longer being trained and developed to execute the full spectrum of quality HR support. Rather, they’re being pushed into specialisations because that model benefits the larger employers who are driving the employment market for HR professionals. This means (just like small businesses) tomorrow’s HR consultants are not equipped to understand the needs of their future small business clients, let alone survive and teach employers how to thrive.
4. The unfortunate reality for both small business (and the HR profession) is the problem of the HR ego. The progression to a business-partnering model in HR, the endless rhetoric pushed by the profession that HR deserves ‘a-seat-at-the-table’, the fragmentation of the profession brought about by over-regulation of larger workplaces, and these attitudes/beliefs becoming embedded due to the most lucrative opportunities only existing in larger businesses, means that HR professionals now believe they’re ‘above’ what they see as low-level work. This includes “done-for-you” HR. This is why HR consulting businesses usually fail to make lasting impact on workplaces, because even though the small business has engaged a HR consultant, there is still no one who knows what they’re doing, willing to actually do the work.
5. Subsequently – there is a gap between what SMEs need, and what the modern HR professional is willing to provide, and small businesses are at significant risk. Small businesses are left seeking support, but most are only finding options where either:

(a) low-level skill is being provided, giving all small businesses the same ‘one-size-fits-all’ HR templates and basic interpretations of workplace rules. Services are being provided without any execution capability or systems whatsoever to specifically and individually advise and influence operations, teams, and leaders in small businesses (think – the phenomena of all those consultancies selling you a low-cost subscription to access templates and have basic questions answered etc.); or

(b) Engaging consultants who do nothing more than present strategic sounding solutions, models, frameworks and people-centric advice, without any capability to coach, mentor, and execute fundamental internal HR excellence to transform and grow a small business – leaving them to somehow execute these big ideas all on their own.

(c) Neither type of consulting service is equipped to provide genuine side-by-side partnership with a small business long-term to ensure they can survive and thrive in a highly regulated and rapidly changing workplace relations environment.

What could be next which will impact small businesses even harder?

Right now, we’re hearing employer groups, peak bodies, and industry spokespeople on the employer-side ridicule workplace relations amendments that are making life complicated for employers. But, overall, these changes are still nothing much for Tier 1s to deal with. Unions know it, peak bodies know it, the legal industry knows it, and governments know it.

But when the larger employers have been pushed far enough, they’ll have the resources and power available to them to lobby against the changes they’re unwilling to live with, which in turn will inevitably push the left side of politics away from tier 1s, and towards small business employers.

There is no doubt small businesses will begin to lose their exemptions from overregulation at some time in the near future.

This means small business exceptions like the Small Business Fair Dismissal Code are likely to unravel, bringing small businesses under the same restrictions and rules as larger employers – a move which also would suit larger employers and tier 1s, so when the union movement goes in for the kill, they wouldn’t gain much pushback from those in power and with all the money.

It’s a matter of evolution, and small businesses are being forced to evolve or die. It’s un-natural selection.

Indulge me for just a second – regardless of your personal beliefs in the theory of evolution.

Imagine we Homo Sapiens ere the evolved Tier 1 and larger businesses. We’ve been through the ice ages, the stone age, the iron age, the industrial revolution, and the tech age, to arrive here, now, functioning at the apex of our world.

Now imagine the great apes we left behind as we split away from that gene pool, being the micro and small businesses. Comparatively, they’re about to enter the stone age, starting to comprehend the resources around them and creating rudimentary stick and stone tools to work their way through complex issues.

The problem being that the new and extended regulatory pressure being placed on small businesses will require them to skip a few ‘ages’ of evolution, and this requires the most advanced jump in HR/IR capability small businesses will have ever been challenged with.

To survive the evolution, small businesses will need to have their own version of a HR department just to keep up with fundamentals of compliance, if they want to employ any person in Australia.

The traditional style of HR department is far too much to bear, not only being unaffordable, but also because the modern HR practitioner (if internally employed) is going to create unwanted pressure elsewhere and all over the business. The modern HR practitioner, generally, isn’t skilful or developed in commercial assessment, understanding enterprise-wide commercial impacts of their advice, and risk identification/mitigation, all which directly conflict with their tendencies to prioritise HR wants and needs – as their great profession has taught them.

 

If you’re a small business operator trying to get ahead of new and amended regulations, contact us now to get some clarity on what lies ahead.