HR provides prevention, not cure: the financial risks of missing the HR basics
It always starts the same. A company is growing fast, but the financial risks of missing HR basics are quietly building. HR can wait or at least that’s what founders tell themselves. After all, sales deals feel more urgent than policies and procedures.
But ignoring HR isn’t neutral. It’s a choice which carries a price. The bleed doesn’t show up as an item “HR” on a balance sheet. It shows up in frustrated employees and managers spending their time patching problems that could have been avoided from the start.
A recent story
I worked with a services company. The team worked hard, moved fast and relied on an overworked Office Manager to manually calculate hours and salaries. It worked for a while until the company grew from 15 to 40 employees.
The mistakes started small: a missing overtime payment, a late bonus. Soon those errors led to big frustrations. Employees started to lose trust in the company, feeling that leaders didn’t value their hard work. These “little” mistakes signalled a lack of respect and organisation. The hidden cost wasn’t just the time fixing the mistakes, but it was the loss of trust and low morale that began to impact productivity.
The invisible, hidden costs
The financial risks of missing HR basics don’t usually show up as fines or tribunals. Not every employee decides to go down the route of employment tribunals and you will not see many companies collapse because of them. The real financial risk is quieter but no less damaging. High turnover forces businesses to keep recruiting. Managers lose hours dealing with problems that should never have arisen. It’s the disengagement that reduces the level of productivity long before they decide to resign.
I have seen companies throw thousands of euro at recruitment simply to replace people who should have never left. One business I advised had built an excellent service, but onboarding was non-existent. New employees arrived and they were left to figure things out on their own and many quit within the first six months. The company wasn’t losing money to lawyers but was losing money to unnecessary turnover. All because no one had invested in the basics of how-to bring people into the business properly.
Why HR basics matter
HR basics are not red tape. They are prevention. Clear contracts, proper leave tracking, structured onboarding, clear policies and procedures, performance conversations: these aren’t “nice-to-have” but are systems that stop small issues from turning into large and expensive ones.
When these foundations are in place, companies are saving money, keeping people employed for longer and can scale in a sustainable manner. When they are ignored, the company bleeds cash and credibility.
Closing thought
Not having HR basics in place isn’t harmless. Few leaders realise it is among the biggest financial risks of ignoring HR. It’s a financial risk disguised as an administrative delay. Investing in HR from the start protects your people and your bottom line. Prevention is always cheaper than the cure.
At SurgeAdvisory, we help companies put these fundamentals in place. Our work builds structures that prevent risk, reduce waste and make growth sustainable. HR is not paperwork, it is protection. And it should be about creating value and resilience.
About the author
Maria Bartolo Zahra is Managing Partner and HR & Compensation Specialist at SurgeAdvisory. She has over twenty years of human resources and business advisory experience.