Business Advisor: April 2011

These key functions can be the difference between a business that thrives, and one that merely survives.

These key functions can be the difference between a business that thrives, and one that merely survives.

Human resources (HR) and information technology (IT) provide key supports your business needs in order to succeed. HR and IT functions are not likely to be at the top of your list when you’re focused on running day-to-day operations, but without sound strategies in these areas, your business may not be reaching its full potential.

Let’s consider some of the key HR and IT mistakes made by many small and mid-sized businesses, and explore some of the opportunities you may be missing out on.

Staffing HR roles
One of the biggest mistakes small and mid-sized businesses make is not having an HR professional to run the people side of the business. Many companies we consult with have the person who is administering the payroll also managing the HR function. But payroll responsibilities require a very different skill set from HR responsibilities, which include recruiting, orientation, policy development, employee relations, terminations, succession planning, talent planning, and compliance with various federal and provincial labour and human rights laws. Would you use your chief baker as your cashier?

Would you use your lawyer as your accountant? Not likely, and with good reason. Imagine how many loaves of bread or batches of cookies a baker manning a cash register isn’t making. Allowing people to perform the tasks they’re good at is the best use of limited staff resources.

The lack of professional HR management or support in a business can also be costly. You have probably heard the expression that your business is only as good as the people you hire. Recruiting is important, since recruitment mistakes cost time and money. It is critical to have a formal performance measurement process in place to deal with underperforming employees. Without one, these lacklustre employees may continue to underperform, negatively impacting the company’s efficiency. Termination may become the only option to resolve the situation, but this is often an expensive route.

Lack of compliance with employment and human rights legislation, such as the Employment Standards Act, can also be very costly. Failing to file a pay equity plan, not paying overtime, and not adhering to human rights requirements or provincial legislation, such as Ontario’s workplace violence prevention measures, can lead to fines and even lawsuits by disgruntled employees.

Small and mid-size businesses often believe they cannot afford professional HR advice or assistance. In our view, you can’t afford to ignore this critical facet of your business. You can bring this expertise on to your payroll, or outsource it. Whichever option you choose, do yourself and your bottom line a favour by making sure you have HR covered.

Getting IT right
The missed IT opportunity we see most often is when companies do not thoroughly understand Cloud computing and what it can do for their business. The “Cloud” is really a metaphor for the Internet, and “Cloud computing” is the provisioning of IT services from a remote, secure and scalable offsite location.

When you started your business, you likely had no choice but to purchase a server, find space for it (often tucked away in a closet) and then hire resources to manage it. Cloud computing offers a choice to increase your business productivity, collaboration, data security and access to information without having to purchase another server or upgrade your hardware.

There are several advantages Cloud computing offers over hosting your own server. It provides an alternative to committing your own time and IT resources. Your business has an instant disaster recovery and business continuity plan. Employees have remote access from any location at any time.

The Cloud works on a pay-as-you-go per user model, meaning there is no upfront investment. Finally, there is no need to install, upgrade and maintain the software and servers that you rely on, or update virus definitions and troubleshoot problems. Cloud computing comes with round-the-clock service and access to 24-7 tech support.

How do you know if the Cloud is right for your business? Consider the following factors:
IT resources: If you can’t afford dedicated IT staff, Cloud computing is a viable alternative to running your own server.

Total cost of ownership: If your capital expenditures for servers and related technologies are reasonable, you may not need to be in the Cloud. But if most of your IT expenses are related to support and management of the infrastructure, Cloud computing may be a better option.

Current infrastructure and business practices: If your existing technology solution is not scalable and cannot grow as your business grows, the flexibility Cloud computing offers might be a better fit for your business.

Disaster recovery readiness and data security: If your company backs data up daily, and you have a current, comprehensive business continuity plan in place, your own servers will probably suffice. If you are concerned about being able to recover from a disaster, or if you worry about whether your client data is safe from hackers and viruses, Cloud computing might be better-suited for your operation.

Mobility: If you operate from multiple locations or intend to operate from multiple locations in the future and are not sure how you are going to support the technology needs of these locations, consider turning to the Cloud.

If you’re on the fence or you’re just hearing about it now, do yourself a favour and investigate its merits. Improving your IT can go a long way to helping your HR. / BJ

Jacq Hammond is vice- president of the Human Capital Advisory Services practice at Fuller Landau LLP, and Vlad Guzenberg is president of the Fuller Landau Technology Group. Both are located in Toronto. Fuller Landau provides tax, accounting and business advisory services to owners of growth oriented mid-size businesses. www.fullerlandau.com.