No matter your business or industry, you will require some kind of HR function. Be it recruiting new staff, managing rosters, managing performance, or even just ensuring your employees are paid on time and correctly – all Australian businesses with employees must engage in HR to some degree.

Let’s examine three common HR models we see with our clients with a focus on the lean approach.

Absorbed HR

Rather than employ a dedicated, in-house HR administrator or outsource to an expert, businesses that operate this model rely on themselves or other non-HR representatives to undertake HR administration and management as part of their role.

As these businesses get bigger, and HR tasks flow down the organisation, line managers themselves may take on more HR responsibility for their respective teams.

The risk of this is that HR tasks may divert management from their core tasks, potentially reducing productivity and revenue. It may also cause HR to be overlooked entirely, putting the business at increased risk, or creating dissatisfaction among employees.

If you are operating under this model, it is important to ask yourself the following four questions:-

  1. Do you find that managing employment issues diverts attention from adding value to your business in yours or your other manager’s primary role? How much time in a normal week is lost to this?
  2. Which employment-related activities are most challenging and what is the potential impact of getting these wrong?
  3. Which employment related activities, if managed more effectively, would provide the biggest impact on overall business performance and profitability?
  4. What is the current level of internal HR expertise and/or access to immediate and accessible external HR expertise for better/faster decision-making and overall compliance?

Traditional model

Where SMEs have invested in the HR function, by far and away the most common approach taken is the traditional model.

In this model, HR is typically delivered via an internal function (manager or small team) following the approach adopted by most large, corporate organisations. HR processes may be documented, centralised and scheduled. Performance is often managed through annual reviews.

What works well in the traditional model is that HR is given a core focus. A person (or group of people) within the organisation have the responsibility for ensuring employees are dealt with in a fair, equitable and professional manner.

The problem small to medium businesses face when implementing a traditional model is that it can be inflexible and expensive. Secondly, their success is solely dependent on the ability of the HR manager to influence and add value. Due to the availability of affordable resources, this more often than not ends up an immature function devoid of any real value to the business.

Traditional HR is slow to adapt and change as required which can hinder businesses operating in today’s fast-paced environment. HR needs to be nimble and resilient – and thrive during change. The concept of “HR from the outside in” is about discovering external business trends and stakeholder expectations to define successful HR and turn this into action.

Lean HR

Within a lean business, operations, culture, processes and work activities are aligned to employees so as not to waste talent and abilities. Lean is all about increasing return on investment, delivering reliable results while expecting uncertainty and being able to manage it on the run.

Lean HR also acknowledges that line managers can absorb many HR responsibilities and play a key role in talent management with access to the right tools, training and expertise. Managers need tools to reduce administrative time spent on transactional activities such as recruitment, onboarding and rostering. They also need training to build their capability and confidence so that they can effectively lead and make quality decisions. And lastly, they need access to quality expertise to ensure that any HR issues are resolved quickly, with common sense and with minimal risk.

By empowering your line managers – by providing them access to the right tools, training and expertise – your business can benefit from:

  • Better bang for buck compared to traditional HR functions and overheads;
  • Technology to improve administrative efficiency and manage the employee life cycle;
  • Improved engagement and retention of line managers through upskilling and professional development; and
  • Increased employee engagement through enhanced management capability.

Other examples of lean HR include working with service providers who can offer solutions to SMEs utilising their economies of scale for virtual HR partnering, employee assistance, training and payroll.

The right tools: why cloud HR technology is key to lean HR

There are numerous technology solutions in the market that can simplify your HR management and administration. They range from payroll systems through to rostering, recruitment and onboarding.

An ideal HR platform for SMEs looking to implement a lean HR solution should ensure that payroll and HR transactional activities are automated as far as practicable, ideally with an employee and manager-self-service capability – and completely paperless (yes – it is possible!).

You also want the ability to access information anywhere in the world with a cloud-based solution. This ensures visibility over key workplace data and metrics and the ability to engage with a virtual HR manager to partner with your business more efficiently.

Through the use of HR technology like Employment Hero, we have been able to partner with Australian SMEs, providing them affordable access to HR expertise, tapping into all the key metrics, employee files and documents from a virtual location. We are partnering with SMEs in all corners of the country and we have never needed to set foot inside their business – which keeps the service lean and cost effective. When they are ready to invest in more on-site time as they grow we are ready to help.

The right training: how do I leverage and retain talent under a lean HR model?

You and your managers are the key drivers of your business’ success. Retention of your managers in a competitive environment must be a priority.

Aside from the training your managers may require on any systems you choose to implement under a Lean HR model, they will also need support to build their capability and confidence so they can effectively manage their teams. Managers have the greatest influence on employee engagement, so creating a quality management team will have flow-on effects to the rest of your business and improve overall staff retention.

Getting the most out of existing resources and giving them access to bite sized chunks of learning is critical. The types of training that we see in high demand include:

  • Manager to Leader Concepts
  • Legal Obligations of Employment
  • Workplace Safety for Managers
  • Managing Underperformance
  • Having Effective One on One Conversations
  • Coaching in the Workplace
  • Goal Setting
  • Recruitment & Induction

Access to expertise: how does the lean HR model improve decision-making?

You cannot expect your line managers to become experts in all facets of HR – you employed them as managers, not HR specialists – but you do need to make sure they know where to go when a complex issue or question arises. Building a relationship with an expert partner means you can rest easy in the knowledge that any employee issues will be resolved quickly, with common sense and minimised risk to the business.

It is important that the advice is pragmatic – and not conservative. Delaying performance management decisions can be the most costly to any SME. Equally getting these decisions wrong can be just as damaging to the bottom line.

Ideally for a business to prosper it needs confidence and peace of mind to make decisions and the ability to leverage specialist expertise where required.

What we are seeing now is that this type of service can also be backed by complimentary representation for any workplace claims – meaning no hefty and unexpected legal bills and the ultimate in peace of mind.

Need help or advice?

At Employment Innovations, we partner with Australian businesses to help them adopt a lean approach to HR management using cloud-based technology and a national consultant network. Our clients can be confident that managers at all levels within their business have on-demand access to the right tools, training and expertise to make the right decisions when it comes to leading teams. If you would like to discuss lean HR and how it can benefit your business contact us today.