8 mistakes business owners make when signing up for HR retainers
HR retainers are a great way to hire professional HR support at a fraction of the cost of a full time HR employee. I’ve explained in a previous post how retainers work.
In this blog I am going to outline some of the mistakes business owners make when choosing an HR retainer, and how you can avoid those errors.
Let's start by looking at quality versus quantity.
Thinking more policies means better value
Is an HR retainer offering 10 policies as good as an HR retainer offering 30 policies?
You might think not. But remember, if you have a policy for something, then you have to follow that policy every time. No exceptions. Even if the policy covers something that is not a legal requirement.
There are a handful of policies that you need to have by law, or that it’s a really good idea to have as a small business because they will help you manage your business more effectively, or will protect you if you have to dismiss someone. Policies like discipline, grievance, absence, poor performance, holidays, and equal opportunities.
There are probably a couple of others that are particularly relevant to your particular business.
But my general rule of thumb is that if you employ 10 or more people, and you have more policies than people, then you probably have too many policies.
And your policies need to be written with a small business in mind. Which means they need to be flexible, so that they don’t tie you up in knots, and effective, so they actually help you manage your business and solve your HR problems.
Signing up for a long initial period
Many of the large HR companies have a five-year lock-in for their retainers. And a tiny window at the end of the first five years during which you can cancel.
If you miss the cancellation window, your contract automatically renews for a further 3-5 years. With a tiny cancellation window at the end of that extended period.
Most small businesses change a lot in 5 years. It’s almost impossible to anticipate today what your business will look like – or need in terms of HR support – in 5 years time.
You could end up with a very expensive retainer that doesn’t actually meet your business needs at all.
Your first HR retainer with me will be for 12 months. I work this way because there is often a lot of work in the first 3-4 months of a new retainer to set up policies, contracts and new ways of working, and I know my small business clients appreciate being able to spread that cost over 12 months.
After the first 12 months you, or we, can cancel the retainer at any time, by giving 60 days notice. That means you always stay in control, and the retainer can be flexed up or down to meet your changing business needs.
Not meeting your main contact before you commit
Always check whether the person selling you the retainer is going to be dealing with all your HR issues when the retainer starts. Some HR businesses have sales teams to sell their retainers, but the HR work is done by someone completely different.
In a small business, its essential you can work well with your HR consultant. They are going to partner you to make some of the most important, uncomfortable or downright scary decisions in your business. Decisions like who you employ, how your people will work together, how you’ll maintain standards, who no longer fits, and how you are going to part ways with them.
So, when choosing your HR consultant, you need to know that:
You can understand each other. So they understand what you need, they can explain HR issues to you using straightforward language, and they answer your questions, so that you fully understand what they are advising you to do, and why they recommend doing it that way.
The consultant understands your business, and your approach to business risk.
They are prepared to challenge you and suggest alternative ways of dealing with issues that still achieve your business goals.
You feel confident they know what they are talking about, and you are going to work well together.
You will only find this out if you meet the person or people who will actually be your first point of contact during the HR retainer.
I talk to every potential client for at least 30 minutes before I offer you an HR retainer. Because I know you need to see if you can work with me – and equally I need to know if I can work with you.
If I don’t think I am the right consultant for your business, I will tell you why, and who you should be looking for instead. And if I can suggest someone else who might be a better fit, I will do that too.
Letting the salesperson scare you about tribunal risks
There are a lot of tall tales out there about employment tribunals. You might have heard scary statistics about the number of different ways employers can break the law and end up in an employment tribunal, potentially bankrupted by a 6-figure tribunal award.
And there is all sorts of speculation about how terrible day 1 rights will be for employers, that is being used to frighten business owners into signing up for long retainers.
You might be terrified about having a simple conversation with someone who is underperforming, in case you end up in a tribunal for saying the wrong thing at the wrong time.
The truth – the real truth - is that huge awards are very, very rare. They usually involve a long history of dreadful behaviour by the employer, and an employee who was on a very good salary.
And it might surprise you to know that there are about 130,000 employment tribunal claims submitted each year, in an economy with over 28 million paid employees, working in just over 1.4 million organisations.
Realistically, your chances of taking the stand at an employment tribunal are actually pretty low. (Unless you really are a terrible employer, of course!)
And no HR retainer in the world can ever guarantee that you won’t end up with an employment tribunal claim against you.
Of course, my interpretation of the real risk of a tribunal doesn’t make a great sales pitch if you’re trying to sell an expensive HR retainer with Employment Tribunal insurance.
So be aware of the sales pitch, and give it the credibility it deserves. Which in my opinion is less credibility than your average politician.
Instead, I recommend you think instead about how a carefully tailored HR retainer, designed specifically for your company, could help you grow or improve your business. How it could build your confidence to take difficult decisions, knowing you have the right processes and support to manage HR issues quickly and fairly. Allowing you to focus on achieving your business goals with a coherent, motivated and engaged team.
The right HR support can be a powerful driver of organisational success. It can make you more profitable, more productive, and help you sleep more peacefully at night.
My advice is to stop listening to tribunal scare stories, and ask your consultant instead about the positive possibilities that the right HR can bring for your business.
Choosing on the basis of location, rather than skills or personality fit
There’s a lot to be said for having a local HR consultant. But think carefully about what local really means, and how important it is for your business.
Finding the closest HR consultant to your workplace might sound like a good way to choose, but if that consultant has no experience in the HR issues that are keeping you awake at night, then they aren’t the right consultant for you.
Also think about whether you really need your HR person to visit your premises regularly, or whether you are happy to have a remote HR consultant that you can speak to by phone or Teams/Zoom.
I have clients I have never met face to face, and others whose sites I visit every month. And I have clients in my own town, Long Eaton, that I don’t see from one year to the next. We still communicate regularly, and manage recruitment, performance, team building, absences, disciplinaries, redundancies, and all the other challenges that employees bring to a business.
It will be more helpful to think about what you want your HR consultant to do, and how you want to work with them, before deciding on the geography.
Placing too much importance on industry experience
This might be a bit of a shocker, but (and I’ll say this quietly) HR is actually pretty much the same, whatever industry you work in.
Thinking your HR consultant needs to have experience of working in your industry is a bit like saying you can only drive an electric car if your previous vehicle was electric. I mean, previous experience might be helpful, but if you’ve only ever driven a petrol or diesel car it doesn’t take long to become confident driving electric.
There are some differences or idiosyncrasies in every industry. Just like no two businesses are the same. But an experienced HR professional can very quickly identify what is different about your business and industry, do some research to understand more, and deliver an HR service that meets your needs. And often, our knowledge of how other industries work can bring a lot to your business.
You don’t need to spend ages looking for someone with extensive experience of YOUR industry – it really isn’t going to make as much difference as you think.
Not implementing the changes you’ve paid for
So, you signed up for your retainer, your consultant prepared you new contracts of employment and a new HR handbook, and six months later…
…they are still sat in your inbox, your employees are getting antsy, and now you have a serious HR problem or two that need to be settled quickly.
But because you didn’t put your employees on their new contracts, or issue the new HR policies, you can’t use any of those documents to deal with your HR problems.
And that usually means something that could have been dealt with almost immediately is now going to take weeks longer, or is going to cost you a lot more to resolve.
It’s enough to make a consultant cry. And probably you too.
Your HR retainer is there to make your life as a business owner easier. But you do have to take some responsibility to do the things you need to do to make that happen.
To get good value from your HR retainer, you need to implement the things your HR consultant provides for you. If you don’t feel comfortable doing that, speak to your consultant. We’d much rather talk through your concerns and explain things to you, or give you some additional support to implement, or suggest a different approach, so that you can put in place the things that will protect your business and help it to thrive.
Choosing on price, rather than service and value provided
Price is important. We’re all trying to keep a lid on costs in a challenging economic climate.
But value for money is even more important.
Cheaper HR retainers usually involve template policies and contracts that are written for an “average” business (whatever that is). If you want longer notice periods for some employees, or different benefits, or flexibility over location, or better than statutory holidays, for example, you’ll have to do a lot of work on those documents yourself before you can use them.
And to make any money, those providing cheap retainers need to have a lot of clients. Which may mean it’s harder to get hold of them when you need support, or the type of support they can offer you is limited unless you pay extra.
HR policies and contracts might tick some boxes in compliance terms, but they won’t drive change in your business.
Whereas an experienced, qualified, pragmatic and commercially-focused HR consultant, like yours truly, absolutely can.
A good HR consultant should make you think differently about your business, your options and the way forward. They can suggest approaches and solutions that you had never thought of, or didn’t think were possible. They’ll help you understand the risks and benefits of different ways of dealing with issues, so that you can make a fully informed decision about the right approach for your business.
Now you know the mistakes to avoid, you can be more confident that you are asking the right questions when you look for your next HR retainer.
And if you are ready to have a chat with me, please get in touch:
Or if you’d rather just put an appointment in my diary, you'll find a link to my calendar on my contact page.
I look forward to hearing from you.
Tagged as: Better HR, HR Retainer
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