The burden of HR is becoming impossible for the small to medium business sector.

I remember sitting in my father in law’s office. I was a spotty 30 year old executive so this would have been around 2001. We were discussing HR, the bane of his life. He ran an oil and gas Engineering Recruitment Business and was bemoaning that he increasingly had to work with HR teams rather than the managers he used to supply to and there was a serious gap in the technical and market knowledge of the HR recruiters who typically had never even seen an oil rig or well, let alone understood how they worked. This was one of the periods in the industry when corporate procurement teams decide that staffing can be commoditised so they write large contracts with the likes of Capita and…well… we all know what happens. Eventually they realise this doesn’t work before going back to basics only for the same to creep in over the next 5 to 10 years. Over the thirty or so years of my career I have seen this cycle rinse and repeat again and again.

Anyway, at the time, he pointed to a shelf on the wall of his office – there, in all their glory, was a dust covered series of bound volumes of papers from Croners. This was the HR bible for small businesses. If you needed any help or advice, you’d simply reach for Croners and the answer would be there. Every month, Croners would post out update pages and you would swap out the old ones for the new.

My father in law only opened Croners when he was hiring someone or managing sick leave. Mostly they remained closed, only ever opened monthly when his PA would swap out the old for the updates.

Then, around 2010, when the Equality Act came in we started to see an increase in the amount of time, but also the amount of expertise required to navigate HR. Croner’s volumes were no longer sufficient.  A new breed of service provider emerged – the freelance HR Consultant, offering services to small businesses. Since then the burden has continued to increase. The paradox here being that the laws and administrative functions required to comply with them have pretty much all been designed for larger employers with the in house specialists to manage. The paradox being that the majority of British workers work in Small to Medium Enterprises (SMEs) which are under 250 and unlikely to have such expertise in house.

Now none of this is necessarily unusual, anyone running a small business knows that  the lobbying power of big business has seen a huge increase in the burden of bureaucracy, this was a particular feature of the EU. It is in the interest of big business to increase the burden of statutory administration, knowing that smaller competitors cannot afford to implement it. Sadly, Parliament has proven remiss in protecting the Small Business Sector and those entrusted to represent us have been less than on top of this. The culmination being the open favouring of big businesses over small during the lockdowns and the largest transfer of wealth in history.

So back to HR in small businesses. We know that the introduction of Equity/Equality Diversity and Inclusion (EDI) policies, driven by activist organisations and ESG policies has backfired on the British Economy. The figures are in supported by the Dynata Survey data from the Free Speech Union  and the Department For Business and Trade report in March 2024 .

However, employers continue to push these policies and demand compliance from their workforce. As I highlighted in my article last week, this is having serious real world consequences to the tune of several hundred thousand losing their jobs for essentially having the ‘wrong opinions’. ESG initiatives have EDI baked into them – if a large business wants funding from somewhere like Blackrock, then they need to agree to implement ESG as a condition of the funding. This inevitably means driving EDI and other ‘initiatives’ down the supply chain. Supply paper clips to a FTSE250? Well you now need to show you have a raft of policies in your business, no matter how small, including EDI and EDI training. It’s the same in the public sector and it is all very well for Kemi Badenoch to highlight the problems with this but NHS trusts and others in the public sector are pushing the same to their suppliers.

This is how EDI is pushed into small businesses. It’s usually done by buying ‘off the shelf’ training or bringing in an EDI consultancy, usually staffed by activists,  which then quickly trains the staff in ideologies like Critical Race Theory and Radical Trans Allyship. As the government report quoted above highlights, training EDI is extremely complex and it is very easy, through lack of time or resources, to get it wrong and for it to backfire horribly on your business leading to the devastating number of sackings and other negative outcomes. This is how 65% of British workers report that they have been trained in EDI despite most British workers working in SMEs.

How on earth are Small Businesses meant to navigate all this without time and resources. Furthermore, if they have inadvertently damaged their business by, with the best intentions, implementing EDI which has destroyed employee and colleague relationships, how on earth can you fix this?