In many small and medium-sized companies, “HR” is still seen as a luxury — something you add once the company is big enough, structured enough, stable enough.
In reality, that thinking is exactly what creates the most costly HR problems.
SMEs don’t fail because they lack an HR department.
They fail because they wait too long to bring HR in.
The false choice: no HR vs. full-time HR
Most SME leaders believe they have only two options:
No HR at all (the founder handles it, on top of everything else)
A full-time HR manager (too expensive, too corporate, too soon)
So they postpone the decision.
What actually happens in the meantime is predictable:
Contracts are copied from templates found online
Roles are defined “on the go”
Difficult conversations are delayed
Decisions are made with good intentions, but no framework
It works… until it doesn’t.
The moments when HR suddenly becomes urgent
HR becomes unavoidable at very specific moments — and they are almost always reactive:
The first hire:
What type of contract? What probation? What expectations? What flexibility is legal — and what isn’t?
The first conflict:
Between two employees, or between a manager and a team member.
No process, no documentation, no neutral ground.
The first underperformer:
Everyone sees it. Nobody addresses it properly.
Months go by. Motivation drops. Tension spreads.
The first dismissal:
Emotion, stress, legal risk — all at once.
One mistake here can cost far more than any HR support ever would.
The first long-term sick leave or burnout:
Suddenly, the employer has obligations they didn’t anticipate.
This is usually when HR is called.
Not strategically — but in emergency mode.
Why DIY HR is risky (even when intentions are good)
Founders and SME managers are often excellent at what they do.
HR is simply not their core job.
The risk isn’t lack of care.
The risk is lack of distance, structure, and legal grounding.
Common patterns I see:
Being flexible with one person… and unfair to the rest
Avoiding confrontation to “keep the peace”
Managing people by intuition instead of clarity
Delaying decisions because they feel uncomfortable
This doesn’t make leaders bad managers.
It makes them human — and exposed.
What SMEs actually need: HR at the right moment
Most SMEs don’t need a permanent HR presence.
They need targeted, timely HR support.
HR should:
Step in when a decision matters
Provide structure without bureaucracy
Protect both the employer and the employee
Leave once things are clear and under control
This is where fractional or on-demand HR makes sense:
When you hire
When you restructure
When you grow
When something feels “off” but you can’t quite name it
HR doesn’t have to be heavy to be effective.
It has to be precise.
HR is not overhead. It’s risk management.
Good HR doesn’t slow a company down.
It prevents small issues from becoming expensive ones.
Handled at the right time, HR:
Saves money
Preserves trust
Protects culture
Allows leaders to focus on growth instead of damage control
The question for SMEs isn’t “Do we need HR?”
It’s “When do we need HR — and for what?”
Because in HR, timing is everything.