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Is an HR function really necessary for small businesses?

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Enabling employees to "do their hobby at work" and shunning an HR function in favour of managers leading the people agenda has helped small business Cougar Automation to turn around its business, MD Clive Hutchinson said yesterday.

The award winning engineering company was close to bankrupt a decade ago but is now sustainable and profitable, Hutchinson said.

"We were at crisis point losing lots of money with poor morale but we got through. Then the penny dropped and we recognised if employees weren't happy at work they couldn't deliver good customer service.

"Once we realised people are all very different we said, let people do the job that makes them happy, let them do their 'hobby' at work. Before, we were trying to change people to fit the job," he said.

Hutchinson added that he takes the lead on people issues and the firm's managers are there to get their people to excel.

"Why would you want an HR function when that is saying, therefore, that it is not the job of the leader in the organisation? Our leaders are there to serve the people and people feel privileged to lead a team."

Cougar has a written policy whereby people choose their own team leaders per project. No one is prevented from leaving a team if it isn't working out.

Hutchinson was speaking at the CIPD annual conference at which CIPD researcher Jill Miller unveiled the findings of research into HR in the SME market. The research finds four stages of SME transition: entrepreneurial edge, emerging enterprise, consolidating organisation and established organisation.

"Between each stage is a tipping point where people practices need to change," Miller said.