By Anne Das
In the fast-paced world of small and medium-sized enterprises (SMEs), it’s easy to think, “We’re too small for HR compliance.” After all, who has time to fuss over policies and handbooks when you’re focused on keeping the business afloat? But according to Ernest Balasingam, Managing Director of Back2Basics Consultants, that mindset can be risky—very risky.
“I hear it everywhere I go: ‘We’re a small company, why do we need HR compliance?’” says Ernest. “But the truth is, skipping these practices can lead to much bigger headaches down the road—headaches you’ll wish you’d prevented.”
The Hidden Perils of Overlooking HR
For many SMEs, HR duties often fall to someone already juggling multiple roles—be it the finance manager, admin staff, or even the business owner. And while this may seem like a cost-saving move, it can leave gaps that may lead to employee grievances or even legal trouble.
“Without a structured HR system, things can escalate quickly,” Ernest warns. “Imagine not having clear policies on issues like performance or discipline—what could’ve been a minor concern suddenly blows up into a costly problem.”
One lawsuit, he adds, is at least double the cost of basic HR compliance plans and an award from the industry could potentially put a major dent in a Company’s P&L. And that’s something no SME can afford.
The Superpower of an HR Handbook
Here’s where things get interesting: You don’t need a full-time HR team to get started with compliance. According to Ernest, every SME—no matter how small—should have one essential tool in place: an HR handbook which must complement a Contract of Employment which should cover all the essential clauses to deal with the corporate challenges.
“If there’s one thing every business should invest in, it’s a good HR handbook,” he advises. “This one document can provide clear guidelines on everything from attendance to performance management, helping to prevent misunderstandings and protecting both the business and employees.”
Not only does a well-crafted handbook keep everyone on the same page, but it also acts as a shield, protecting your company from the kind of legal issues that can sneak up on you when you least expect it.
Wearing Too Many Hats? Here’s Why That’s Risky
We all know the entrepreneurial hustle—multitasking is the name of the game. But when it comes to HR, spreading yourself or your staff too thin can lead to burnout and overlooked responsibilities.
“Handling HR is a serious responsibility,” Ernest says. “When it’s thrown on top of other duties, things slip through the cracks. A handbook helps keep things on track and guides everyone on how to handle key HR situations, even if there isn’t a dedicated HR person.”
From performance appraisals to disciplinary actions, a structured approach ensures that no one—especially your employees—feels neglected or unfairly treated.
The Legal Lifesaver Your Business Needs
One of the most compelling reasons for SMEs to take HR compliance seriously? Legal protection.
Ernst has seen it happen all too often: SMEs think they’re saving money by skipping out on proper HR practices, only to be hit with a lawsuit that wipes out their hard-earned profits. “It’s about risk management,” he explains. “A good HR system minimises the chances of costly legal disputes. And if something does go wrong, proper documentation can be a lifesaver.”
Happy Employees, Happy Business
HR compliance isn’t just about avoiding problems—it’s about fostering a better work environment. When performance is managed well, and employees know exactly what’s expected of them, job satisfaction increases. And satisfied employees? They’re more engaged, more productive, and more likely to stick around.
“Performance management is often neglected in SMEs,” Ernest points out. “But when you have clear guidelines, appraisals, and improvement plans, it makes a world of difference. Employees feel supported and valued, and that helps the whole business run smoother.” And this is a huge step in employee retention which is the biggest challenge faced by most companies today.
Where to Begin: Simple, Practical Steps
Not sure where to start? Ernest’s advice is simple: “Begin with the basics. Even if you can’t hire an HR professional, get an HR handbook in place which complements your contract of employment. And document everything—contracts, performance reviews, disciplinary actions. This not only protects your business but ensures fair treatment for employees.”
Ernest also encourages SMEs to invest in an HR audit. This process will clearly highlight any deficiencies in the company’s HR practices. From there, a ‘road map’ can be created to align employees with their roles and identify gaps in HR processes. It also helps develop long-term employee retention strategies through training. Whether it’s in-house programs or external workshops, having knowledgeable staff can make a big difference in staying compliant and keeping employees satisfied.
Meet Ernest Balasingam: HR Expert and Triathlete
With over 30 years of HR experience, Ernest has become a trusted advisor for SMEs across Malaysia. With a unique blend of legal and practical HR expertise, His consultancy, Back2Basics Consultants, specialises in helping businesses navigate the complexities of HR compliance while empowering them to build sustainable practices.
Interestingly, Ernest’s leadership philosophy is inspired by his experience as a triathlete. “Discipline, adaptability, and continuous improvement—these are values I bring to my HR work as well,” he says. His goal? To make HR less daunting and more accessible for businesses of all sizes.
For those seeking expert assistance with HR training and compliance, reaching out to Ernest could be a valuable step. His tailored guidance and practical solutions are designed to help SMEs navigate HR challenges effectively, stay competitive, and foster sustainable growth.
So, if you’ve ever thought your SME was too small for HR compliance, it’s time to think again. As Ernest puts it, “HR compliance isn’t just about ticking boxes—it’s about protecting your business and giving your employees the best chance to succeed.”
Interested in learning more? You can reach Ernest Balasingam at 012-5162687 or email ernest@back2basics.com.my. His consultancy offers tailored training and advisory services for SMEs, helping them stay compliant and competitive.
