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Small Business HR

Small Business HR

Just like larger companies, small businesses require top-quality human resources (HR) to ensure that they are as successful as possible.

From hiring to firing, it’s important to have the proper procedures in place. For small businesses, these procedures can sometimes be difficult to define.

On this page you will find out more about the range of HR options available for small businesses. We also have an HR prices guide which you can read to find out more about costs for common HR services.

Alternatively, if you are ready to compare top-quality suppliers and access price quotes, you can fill in the form at the top of this page. Approved Index enables you to compare small business HR options easily, so you can find the best solution for your business requirements.

On This Page
Does My Business Need HR?
Which HR Services Might a Small Businesses Need?
Outsourcing HR for a Small Business: Pros and Cons
Small Business HR Costs
Small Business HR Providers

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Does My Business Need HR?

Every business is different, and has its own context, aims and challenges. But no matter what your industry or business size, your employees need human resources services, to support, protect and advise them.

This section can help you to decide the right HR solution for your business.

Number of Staff

The first consideration should be the size of your workforce. The number of employees will determine how much HR support your company needs.

The table below summarises the number of internal HR staff that are usually required to manage different amounts of employees.

The figures are based on a professional ratio which suggests that, for every 100 members of staff, a business will need 2.7 people in the HR department. Based on these figures, many businesses will not reach the right level of staff to have even one full-time employee dedicated to HR. The ‘Outsource or Internal’ column indicates which option will generally be cheaper based on the number of staff.

Number of StaffHR Personnel RequiredOutsource or Internal
5Less than 1 HR staffOutsource
10Less than 1 HR staffOutsource
20Less than 1 HR staffOutsource
501 HR staffInternal/Outsource
1002-3 HR staffInternal/Outsource
2005-6 HR staffInternal/Outsource

If your business employs more than 50 members of staff, it might make sense to hire an internal human resources employee.

On the other hand, hiring a member of staff to work internally very often ends up being more expensive than outsourcing your HR requirements. Even businesses with 200 employees or more outsource aspects of their human resources either to alleviate cost or to ensure quality.

If keeping costs low is your main priority, your best option could be to hire a few internal HR staff members, as well as working with an external consulting agency to support their efforts. This choice will ensure that all processes are properly managed.

Other Factors

Your HR needs are not just about numbers. As a small business, you should consider carefully which areas you (or your staff) might need support. Ask yourself the following questions:

  • Do you have your employee files organised properly? Note that there are documents that should and should not be included in employee files. For example, any medical files should be kept separately.
  • Have you prepared and distributed an employee handbook? This manual should detail your main policies and procedures. It’s an essential resource for your staff.
  • Is a performance review process in place? Giving formal feedback can help employees gauge how they are doing at work.
  • Is your compensation system structured? This is where most of your funds go, so everything should be in order.
  • How would you cope with the long-term sickness of an employee? It can happen to anyone, and you should be prepared.
  • Are you devoting sufficient time and energy to recruiting employees? Even if you have just a handful of workers, your staff is your most important resource.
  • Is staff turnover high at your company? Can you pinpoint why? This could be for a number of different reasons and should definitely be addressed.

If you feel like there’s space for improvement in these areas but you can no longer tackle them on your own, HR specialists can help.

Of course, HR support isn’t only for when something’s not right. If your business is growing, you have an even better reason to hire HR specialists. An HR presence can help ensure that best practices are in place when your company (and your workforce) expands. Being proactive and planning ahead pays off.

Which HR Services Might a Small Businesses Need?

HR Interviewing Services

Basic HR

Small businesses will usually require support with a range of basic services, including:

  • Hiring and recruitment assistance
  • Firing and redundancy assistance
  • Pay support - holiday and sick leave management
  • Absence, welfare and disciplinary management
  • Contract & employment law advice

An external HR support team can help you with some or all of your basic HR needs, as well as any unique requirements you have.

Small Business Health & Safety

The safety of your employees is one of the essential HR concerns. You need to make sure that your staff are as safe and healthy as possible at work. This means ensuring the quality of your own premises and making sure any off-site staff are safe too.

Health & safety considerations include:

  • Are your employees properly trained to use all equipment they come into contact with?
  • Have you made sure that your employees’ work environment is as safe as possible?
  • Have you provided protective equipment where required?
  • Does your business have appropriate general safety equipment (CCTV cameras, fire alarms, burglar alarms, etc.)?

These are only some of the considerations for small business human resources management, but are a good starting point. If your business has not got a strategy in place for any one of the HR considerations mentioned above, it is important you speak to an HR agency as soon as possible.

Outsourcing HR for a Small Business

As shown above, outsourcing HR can maximise both cost efficiency and quality, even for larger organizations within the “small business” category. But what other advantages, or disadvantages, are there to outsourcing your human resource management?

Advantages and Disadvantages of Outsourcing HR

You should carefully weigh up the options before committing to either hiring internal HR staff or an external HR agency.


  • Outsourcing HR is usually the most cost effective solution for a small business
  • Having a specialist agency on board means you can be assured that HR processes will be high quality
  • Neither you nor your staff are liable for any HR processes that go wrong
  • Hiring an expert agency means you’ll be up-to-date with the latest HR trends and practices, such as use of social media for recruitment and cloud-based office management solutions
  • Your staff are free to focus on their own jobs, instead of being distracted by other responsibilities


  • As your business grows, you might lose the cost effectiveness of outsourcing HR
  • You lose an opportunity to promote a member of your staff to an HR role
  • Implementing changes or addressing issues may take longer when you HR manager is based elsewhere

  • Small Business HR Costs

    Outsourcing HR

    There are a range of HR costs that a small business might encounter, depending on the services required. Knowing these prices is essential when deciding between internal and external HR solutions.

    The prices in the table below have been calculated based on those quoted for a previous client; your own quote may be slightly different, but these figures should serve as a guide for a small business.

    Costs can often be reduced by committing to a longer term solution, rather than outsourcing support on a "pay as you go" basis.

    For a detailed breakdown of prices and services on offer from HR agencies, visit our HR prices page.

    ServiceCostExtra Information
    HR Audit£400-£500/dayAn HR audit allows an external expert to assess your HR processes. The cost listed here is based on a day-rate; as a result, your own cost may be more or less, depending on the amount of time required. As a rule, the smaller your business, the less you will pay.
    HR Support£100-£200/monthHR support refers to any outsourced service where your business hands over processes to an external specialist. HR support is useful for most business sizes, but can be particularly useful for small businesses without full-time internal HR specialists.
    HR Outsourcing£100-£300/monthThe cost of fully outsourcing all your HR needs will depend on a range of factors, from the size of your business to the size of your premises.

    The prices given in this table are based on average figures for British business with less than 100 employees, but it is important to remember that your personalised quotes may be different. For an accurate price estimate today, complete the simple form at the top of this page.

    Small Business HR Providers

    Your focus when selecting a provider should be finding the one that most closely matches your specific business requirements. For example, if you have a small business, an HR consultancy with a small business speciality will be able to assist you more easily.

    The table below includes some of the top suppliers to consider for small businesses in the UK.

    HR AgencySpecialismBusinesses Served
    William B. Rose LtdEmployment contracts and lawSmall to large businesses
    Citrus HRFirms with up to 50 staff, affordable servicesSmall businesses and charities
    Moorepay Compliance LtdEmployee payroll and pensions, law, and health and safetyStartups to large enterprises
    AvensureEmployment law and health and safetySmall to large businesses
    Deminos Consulting Ltd Employee engagement, employment law, and HR adviceSmall to large businesses

    Approved Index can help you make the right decision. We will put you in touch with the top UK HR companies that suit your needs, and enable you to compare no-obligation price quotes. Simply complete the form at the top of the page and our advisors will do all the work for you, free of charge.

    Comparing quotes with Approved Index is free, quick and easy, and it could save your business a great deal on your HR consultancy costs.

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