Stuart Gentle Publisher at Onrec

Two-thirds of small businesses risk being fined through lack of HR resources and knowledge

Time-poor small businesses struggling with burden of HR administration are leaving themselves at risk, report finds

  • Only 25% of small business owners polled feel up to speed on matters to do with employee rights and employer regulations
  • As little as 37% of SME owners have a good understanding on all matters to do with employee rights and employer regulations and keep updated on regulatory changes on an ongoing basis.
  • More than 20% take between two and five days to hire and “onboard” each new employee
  • The world’s leading job marketplace which matches SMEs with local talent and offers staff management services, brings to light key issues for UK SMEs

New research from Jobandtalent has uncovered a worrying lack of understanding around employment regulations amongst small businesses in the UK. A lack of HR resources and expertise is leading to risky hiring practices in this market, the report finds.

The report follows the release of official data from the pensions regulator, which revealed that the number of employers being fined up to £10,000 a day for not complying with the new regulations on workplace pensions, has shot up by 300% in three months.

The survey of 500 SME owners was carried out by OnePoll and was commissioned by Jobandtalent, the world’s leading online job marketplace, which matches SMEs with local talent and offers a comprehensive staff management service. The research found that owners of small-to-medium sized enterprises (SMEs) are most at risk due to a lack of dedicated HR expertise or resource.

According to the Jobandtalent survey, only 37% of SME owners have a good understanding on all matters to do with employee rights and employer regulations and keep updated on regulatory changes continuously. A quarter also admitted that while they understand current regulation, they struggle to keep up with changes. Worryingly, 12% felt they have limited to no understanding of present employment regulations – let alone changes in the future. This represents a clear risk to the business.

When questioned about the hiring process and time to hire new talent, two-thirds (67%) of the 500 SME owners questioned revealed that they do not have anyone dedicated to finding talent and hiring or HR. Of those businesses, the vast majority (77%) answered that the responsibility for hiring fell to the business owner.

More than one-in-five SME business owners surveyed (22%) take between two and five days to hire and “onboard” a candidate, including registration, tax and insurance setup, reference checks, payroll registration, pension enrolment – all complex processes which take business owners away from their core responsibilities.

Other findings from the survey shed light on the antiquated methods SMEs continue to use in search of talent, despite advances in technology:

  • Despite the decline in print media, 30% of SME business owners polled still post an advert in a newspaper when searching to fill a role
  • Over half (55%) of SMEs questioned still rely on word of mouth

“We know that small business owners need to hire great talent to grow, but this research sadly shows that a number of UK small businesses are still taking enormous risks when hiring and managing their staff.” comments James Peck, UK managing director of Jobandtalent. “Most small businesses sadly don’t have an HR function or dedicated employment expertise, so the time burden of finding new talent and the risk of non-compliance with employment regulations are both major pain points.

“No one starts a business because they like doing paperwork, but complying with regulations on auto-enrolment and the apprenticeship levy, for example requires an almost constant stream of admin around hiring, payroll and benefits. That’s very time consuming and keeps business owners away from their core tasks. Cutting time to hire and reducing risk are both critical success factors for small and growing businesses, so the ability to hire quality talent quickly with less administration provides businesses with the best possible opportunity to grow.”

Jobandtalent has been designed to dramatically reduce the administrative and HR burden of hiring, onboarding and managing staff, by generating employment contracts, managing payroll and dealing with all payments to local tax authorities.

The company recently completed a $42 million Series B funding round led by Atomico, the global technology venture capital firm set up by Niklas Zennström, the founder of Skype.