Fast Growth Companies
Human resources often gets overlooked by small and medium businesses as an afterthought or just a necessary compliance function. However, new research reveals that those companies that view and operationalize employee-centric HR fundamentals as a strategic asset, core to their culture and go-to-market strategy experience stronger growth and higher performance results versus those that approach HR tactically, as a compliance-driven model.I spoke with Mike Vannoy, Chief Marketing Officer (CMO) at Asure Software, about their latest in-depth HR benchmark report that quantifies the impact of HR best practices across key essential areas of HR management against revenue growth. Their findings and best practice insights and analysis correlate with what I see in my own experience with fast-growing clients.
Asure provides HR and payroll software to over 100,000 mainly small and midsize clients. Mike has 25 years of experience in the HR technology industry and produces a regular in-depth HR video webinar series himself with industry experts addressing the latest HR trends, and new compliance issues impacting the growth of small businesses today. In that time, he's seen an explosion in employment regulations from the federal, state, county, and city levels. This "Cambrian explosion" in compliance complexity imposes administrative burdens on HR that are challenging to keep up with, let alone manage and address effectively. Still, Mike felt the real value Asure and its team provides is helping their client operationalize and improve the "soft stuff" of HR - hiring, developing, training, and retaining talent, which the benchmark report showcases as key indications of company growth, performance, and employee engagement.
Correlating HR Best Practices to Growth
Asure surveyed over 2000 businesses under 500 employees across all industries. The survey asked about 40 HR best practices across 8 categories: recruiting, hiring, onboarding, compliance, performance management, development, retention, and offboarding. It then correlated those practices to whether the company had a down year, flat growth, growth, or fast growth.
The results revealed a stunning ~75% correlation between adopting core HR best practices and high-growth companies. Over 90% of fast-growth companies implemented at least half of the 40 best practices, scoring well across all 8 categories - unlike poor performers experiencing flat to down growth who struggled most with recruiting, development, and retention.
It was also interesting that 83% of fast-growth companies provided on-demand training resources for employees, allowing employees to refresh themselves on best company practices on an as-needed basis while feeling a sense of continued support from the company.
As Mike says, "HR may not guarantee revenue growth. But it's a strategic advantage and solid insurance policy that prevents a down year." The data clearly shows fast growth companies invest more intentionally in their people - finding, growing, and keeping talent.
Start With Recruiting, Development, and Retention
When examining the survey's category scores, Mike and the Asure team found a significant gap between top-performing companies and those experiencing down growth – with the lowest scores for top performers being still higher than the best scores for bottom performers.
While the benchmark report showcases that businesses prioritizing best HR practices are much more likely to enjoy fast growth, it was interesting to see exactly which areas of HR yield the greatest return on investment. Mike shared that the greatest disparity between shrinking companies and fast-growing companies is the actions taken in the areas of Employee Development and Employee Retention. As Mike noted, “While many companies proclaim, ‘Our people are our greatest asset’, the data clearly reveals it’s the companies taking real action that are winning. We also found that half-measures didn’t yield nearly the results as a full commitment to people and processes.”
Overall, the biggest differences emerged in recruiting, development, and retention. High-growth companies excelled at strategic HR, with programs in place even before an employee starts at a company, then ensuring there is a continuum of programs and support to stay connected with employees, with uniquely designed training, and development with even noted career growth plans. Laggards tended to only focus on tactical "box checking" in compliance, hiring, and offboarding. Truly an opportunity lost.
As Mike explains, "It was do you view HR as an administrative task or a strategic way to recruit, develop and retain your best talent?" Leaders should focus first on improving their approach to these three core areas:
Recruiting: It’s important to create a strong employment brand and candidate experience, well beyond word of mouth and career postings on your webpage. Look to recruit from the biggest pool of talent you can and identify the best sources for qualified applicants. And the value of a well-written job description is everything, helps applicants understand the demands of the position and future career opportunities the role presents. 91% of Fast Growth businesses have written job descriptions for each opening. Also, a well-thought-out employee referral program can also be a low-cost and highly effective recruitment tool.
Development: The number one reason many employees don’t stay with a company is training and development support. Providing employees with opportunities to gain new skills, support, coaching, and ongoing development training so they can grow in their careers is no longer a competitor differentiator. It’s a critical component in driving growth. 83% of Fast Growth companies provide on-demand training resources for employees.Also, creating written development plans for employees detailing growth opportunities is also valuable. And highly recommend developing leadership training for managers and stretch assignment opportunities for top performers.
Retention: Maintaining good people to help a company grow is a cornerstone to effectively scaling a business, and building a strong culture that helps attract new talent and showcases strong career paths. Focus on your people, and the people will focus on growing the business. The benchmark report found that 8 in 10 Fast Growth companies regularly surveyed their workforce to assess employee engagement, job satisfaction and goals. It’s important to also conduct regular stay interviews asking what they like about their work and the company. Recognize and reward achievements big and small and provide Career Paths and professional coaching, at all levels.
Mindset Matters More Than Mistakes
The data shows clear correlations between HR best practices and growth.But does HR drive growth, or are they just associated?
Mike believes that even imperfectly executing these practices signals positive intent to employees. For example, a weak performance review still shows investment in an employee's development. He says, "The fact that you do it, showcasing your commitment to their careers and you're trying still separates you from people who aren't doing it at all."
In a tight labor market, small differences in employer brand and culture will determine who attracts and retains top talent. The mindset shift from tactical to strategic HR matters more than getting each practice perfectly right.
Mike sums it up best: "Stop thinking about HR as a tactical box that must be checked and see it as a strategic way to conduct business." You can download the full report to benchmark your HR practices against the fastest-growing companies. Investing in your people properly today will fuel your future growth.
