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SMEs claim HR red tape ties up so much of their time they neglect core activities necessary for survival

Small businesses claim crucial areas such as new business development and customer service are suffering as a result of time spent managing HR issues.

According to research by Croner, which is part of Wolters Kluwer, more than half (60%) of those in SME organisations have no formal HR training. These include CEOs, MDs, finance directors, operations directors, line managers and PA/secretaries - and even HR managers.

But one in 10 are spending up to 15 hours or two days a week on HR. Dealing with red tape and regulations (40%) and health and safety (19%) were cited as the most time-consuming activities.
Spending so much time on these necessary activities - which also include managing employee performance, monitoring absenteeism and logging holiday leave - is having a negative effect on businesses. Three quarters of CEOs and MDs cite new business development and customer service as the most likely areas to suffer.

The survey revealed the effort put into managing employees is not adding to confidence, with 26% of people managing HR in SMEs saying they are not sure whether they are taking the right steps. They are concerned that if they get it wrong the company could face an employment tribunal claim.

A quarter of respondents admit to having no external HR support while one in 10 trawl of the internet for help - which is often an unproductive exercise.  

Richard Smith, head of service development at Croner, said: "Last year was one of the toughest for businesses with almost 27,000 companies going under as a result of the recession. It is obviously important that all companies adhere to HR processes but not at the expense of business survival and expansion.  SMEs need to look at new ways of simplifying HR and other compliance activities and freeing key people to attend to the core responsibilities of their job."