Good HR for small firms in public interest (Analysis)

One-third of Canadians work for small firms, which are underserved by HR
By Claude Balthazard
|Canadian HR Reporter|Last Updated: 08/05/2010

Thirty-one per cent of Canadian workers are employed in businesses with zero to 49 employees, 23 per cent are employed in enterprises with 50 to 499 employees and 46 per cent are employed in organizations with 500 employees or more, according to 2009 Statistics Canada data.

Most companies with 50 or fewer employees do not have a full-time human resources professional on staff. So, roughly, one-third of employees in Canada work in an environment where there is no full-time HR professional.

In Ontario, employers that violate the Employment Standards Act (ESA), 2000, are subject to prosecution by the Ministry of Labour. Information about convictions under the act is public and posted on the ministry’s website.

Recently, the Human Resources Professionals Association (HRPA) cross-referenced the ministry’s list of convicted employers with HRPA membership records. Of the 489 ESA convictions between October 2008 and January 2010, not one could be linked to an HRPA member. And virtually all of these convicted employers fall in the zero-to-50 employees category.

Putting the two together strongly suggests the small enterprise sector is underserved by HR professionals and it would be in the public interest (especially that of employees of small enterprises) for small organizations to access HR services delivered by competent and ethical practitioners. But is there a business opportunity here?

With regards to the premise above, 88.1 per cent of respondents to the latest Pulse Survey agreed small business is an underserved market for HR. Indeed, 75.6 per cent agreed providing services to the small business sector will be a high-growth area for HR service providers over the next five years, and 91.6 per cent agreed it was possible for an HR service provider to have a business that focuses specifically on serving the needs of the small business sector.

On the other hand, 57.8 per cent of respondents thought the HR profession’s efforts to market HR services to the small business sector in the past had been “poor” or “really poor.”

HR associations should step up

Survey respondents thought provincial HR associations should devote resources to the marketing of HR services to small business on behalf of members, with 79.8 per cent of respondents agreeing or strongly agreeing with the idea.

And 83.3 per cent would consider it worthwhile if their provincial HR association would support HR service providers by creating a forum where providers that focus on providing services to the small business sector could exchange resources and ideas.

Interestingly, 42.7 per cent of survey respondents indicated they had offered HR services to the small business sector in the last year.

About 15 per cent of respondents described themselves as self-employed HR consultants. Of these respondents, 81.9 per cent indicated they had offered HR services to small business. This is not surprising.

However, 39.8 per cent of respondents who did not describe themselves as self-employed HR consultants indicated they had offered HR services to small business.

Two things may be going on here: First, the sample of respondents included a number of HR professionals who have offered HR services to small business as employees of a firm that provides HR services, or a number of otherwise employed HR professionals are moonlighting and providing occasional services to small businesses.

It is also the case those respondents who indicated they had offered HR services to small business had somewhat more experience in HR than those who had not — of those who had offered HR services to small business in the last year, 44.8 per cent had 15 or more years of experience in HR, compared to 35.4 per cent of those who had not offered HR services to small business in the last year.

Those respondents who have offered HR services to small business in the last year are somewhat more likely to agree providing services to the small business sector will be a high-growth area over the next five years (79.3 per cent versus 72.8 per cent). There were no other significant differences between those who had offered HR services to small business in the last year and those who had not.

The survey results indicate this is an area to watch over the next few years.

Claude Balthazard is director of HR excellence and registrar at the Human Resources Professionals Association in Toronto. He can be reached at cbalthazard@hrpa.ca.

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