HR strategies for small businesses

Toby Hough at HiBob describes what SMBs can learn from enterprise HR strategies

 

Small and medium businesses (SMBs) compete for talent in the same market as large companies. It’s only natural for them to look to enterprise best practices in people management for inspiration. But while some strategies can be adapted, others won’t translate as well.

 

Take, for example, a 50-person tech startup facing retention challenges. They might look at how a company like Google—with over 180,000 employees—uses structured peer reviews and 360-degree feedback. The key question becomes: what can we learn and tailor to fit our scale? From the start, it’s important to recognise that practices designed for giants need significant adaptation to work for smaller teams.

 

One of the most important parts of adapting big-company strategies for smaller businesses is making sure they still protect and preserve what makes SMBs appealing to talent in the first place. Things like agility, personal relationships, and rapid decision-making. In this article, I’ll explore how SMBs can benefit from enterprise HR practices while maintaining the agility and personal touch that gives them a competitive edge. 

 

 

What can SMBs learn from enterprises

Enterprise HR teams invest a lot of time, resource and expertise to refine result-driven strategies seeing them often achieve higher employee retention rates, faster time-to-hire and improved employee engagement scores. It is in these areas where I see the biggest opportunities for SMBs to learn from enterprise principles, adapting them to fit the unique context of smaller organisations.

 

Structured, consistent processes

Large organisations have mastered the art of creating reliable, scalable structures through consistent processes and defined frameworks. These systems enable them to create predictable, fair experiences for employees while reducing any operational risks.  

 

Fifty nine percent of SMBs still rely on spreadsheets or paper documents for critical HR functions, creating problems that can undermine both efficiency and employee trust. For example, when the criteria for promotions aren’t clear, there’s no clear path for skill development and career progression, and employees feel undervalued and lose confidence in leadership.

 

The lesson for SMBs is to prioritise consistency that matches scale and resource. A simple, standardised interview process beats ad-hoc hiring decisions; regular performance conversations, even informal ones, outperform sporadic feedback. Focus on building repeatable frameworks that don’t require specialised expertise to execute.

 

Performance management and development 

Enterprises have found a winning formula for attracting and retaining top talent by building clear and structured development systems. These systems provide employees with transparent career pathways and growth opportunities, driven by regular performance reviews, skills assessments and training initiatives showing routes to progression. 

 

SMBs can adopt this principle in a way that leverages their natural advantages. Rather than implementing complex performance management software, smaller firms can arrange regular one-to-one check-ins between line managers and employees. Clear goals and honest feedback can go a long way to helping a team grow. 

 

SMBs have direct access to every team member. Leveraging these connections to provide personalised development conversations will retain top talent and help businesses get the very best out of their employees. 

 

Data-driven decision-making 

Large organisations have long understood the power of using workforce data to make smarter decisions, with SMBs now following suit. In fact, a recent survey from Business.com found 50% of SMB HR professionals ranked analytics as essential, with further opportunities for adoption. 

 

Modern HR platforms make it easier than ever for SMBs to access insights. Metrics such as time-to-hire, retention rates and performance correlation with hiring sources can now be tracked without eye-watering costs. This enables SMBs to identify patterns, predict trends and make informed decisions about everything from recruitment strategies to compensation adjustments. 

 

 

Copy-and-paste HR playbooks won’t work

Enterprise HR practices are designed to solve enterprise problems. When SMBs adopt these same practices, they’re solving problems they don’t have and creating new ones they can’t afford. The 40-person company that implements a complex performance matrix designed for thousands of employees isn’t being thorough – they’re wasting time on bureaucracy that adds no value to people who already communicate directly. 

 

But what should SMBS be prioritising in 2025? 

 

Resource allocation 

Enterprises build specialised teams for every HR function from talent acquisition to compliance, allowing for deep expertise in each area. While best practice for firms employing hundreds, even thousands of employees, HR team creation does require significant financial investment and organisational complexity. 

 

SMBs attempting to replicate this level of specialisation face an impossible challenge and risk spreading their resources too thin across too many different functions. SMB leaders should instead focus on identifying which HR functions are crucial for business growth and invest resource there. The key to success is making conscious resource choices for maximum impact.

 

Employee engagement

A recent survey revealed that only 1% of employees in large organisations believe their feedback leads to real change. Complex enterprise systems can come at the cost of genuine engagement, limiting the ability for employees to get their voices heard. 

 

SMBs’ ability to know each team member personally, understand their career aspirations, and adapt quickly to their needs is a significant competitive advantage. One that will drive a happy, motivated workforce. The moment an SMB loses the personal touch by adopting rigid, business-led systems, it will compete on enterprise terms without enterprise resources. This will result in a loss every time.

 

 

Build an HR strategy that works 

Success – having a happy, thriving and retained workforce – relies on balancing proven HR practices with unique SMB advantages. Successful small businesses are those that learn from big companies while keeping what makes them special. 

 

SMB leaders can build on enterprise HR strategies to outmanoeuvre them in the battle for talent, focusing on the principles driving enterprise success while maintaining the operational characteristics that make SMBs formidable competitors. 

 

---

 

Toby Hough is VP of People and Culture Director EMEA at HiBob 

 

Main image courtesy of iStockPhoto.com and MicroStockHub