In small and mid-sized businesses (SMBs), HR teams often bear the brunt of competing priorities. They’re asked to manage recruitment, payroll, onboarding, employee engagement, compliance, and more often with fewer than two HR professionals per 100 employees. This “lean and mean” approach might save on staffing costs in the short term, but the cracks in this model are beginning to show.
Recent research paints a clear picture of the pressure HR teams are under:
- Nearly 44% of professionals feel overworked, with HR leaders disproportionately affected as they balance administrative and strategic demands. (Gallup, 2024)
- Turnover costs are climbing: disengaged employees cost organisations up to 18% of their annual salary. (Gallup, 2024)
- Compliance missteps are costly: misclassification fines and missed tax filings can cost SMBs tens of thousands in penalties annually. (PwC Global Workforce Report, 2023)
The problem isn’t just about having too few hands on deck. It’s a lack of strategic investment in HR as a business partner. As SMBs grow and adapt to hybrid workforces, global hiring, and increasingly complex compliance demands, HR needs more than time; people teams need tools, resources, and support to thrive.
This is a call to action. If businesses want to thrive in 2025, it’s time to rethink how their people function. Lean teams don’t just need more time; they need the right tools, partners, and strategies to shift from survival mode to proactive people planning.
Because when HR teams are supported, businesses gain the resilience and adaptability they need to succeed in today’s complex world.
Why is this problem growing? The systemic challenges facing HR teams
The challenges facing HR teams aren’t just about doing more with less. They’re rooted in larger changes to how businesses operate and grow. Let’s break it down.
As companies expand and adapt to remote work, hybrid setups, and global hiring, the role of HR has grown far more complex over the past decade. Where historically an HR department might have been tasked with handling admin and strategic work for just one country or region, many people teams are now managing multiple countries and territories. They’re doing this with outdated tools and limited resources.
Let’s continue with remote work as an example. Global telecommuting has opened up incredible opportunities for hiring worldwide, but it’s also added layers of complexity. HR teams now find themselves navigating cross-border compliance, local tax laws, and onboarding requirements that differ from country to country. What used to be straightforward, like drafting a contract or running payroll, can now take hours of research and coordination. Even then, it might not be handled compliantly. When your people team is already stretched, this added complexity eats into the time they need for strategic initiatives.
Compliance is another growing pressure point. Employment laws are changing rapidly, and missteps can be costly. From worker misclassification to missed tax contributions, the risks of getting it wrong are higher than ever. Lean HR teams often end up stuck in reactive mode, trying to catch up with evolving regulations while balancing day-to-day tasks. This leaves little room for proactive planning, let alone supporting employee engagement and development.
What makes this even harder is that many businesses are scaling in chaos. Each new market, hire, or process introduces a fresh set of challenges. Instead of building scalable systems, HR teams are stuck reinventing the wheel for every new hire or region. Without the right tools or support, even simple tasks can become time-consuming bottlenecks, taking HR further away from the people strategy that drives long-term growth.
This isn’t just an issue for HR; it’s a challenge for the entire organisation. When HR is stretched too thin, engagement drops, compliance risks grow, and opportunities for growth slip through the cracks. The real problem is the lack of strategic investment in HR as a true business partner.
Solutions for lean HR teams: Time to rethink the approach
The truth is, asking lean HR teams to do more with less isn’t sustainable. These teams are already stretched thin, balancing compliance, recruitment, onboarding, and people strategies. Instead of pushing harder, businesses need to step back and ask how they can work smarter, not harder.
First, it starts with equipping HR teams with the right tools and support.
When repetitive tasks like payroll, benefits, and compliance are automated or managed externally, HR can focus on the big-picture priorities. For instance, an Employer of Record (EOR) can take on compliance-heavy responsibilities like managing local tax filings and employment laws, especially when businesses are expanding into new markets. This doesn’t just save time; it reduces risk and gives your team breathing room to focus on what matters.
Next, you need to commit to effective workforce planning.
It’s not enough to hire quickly. HR needs the space to think strategically about how each hire contributes to long-term goals. Testing markets with contractors, planning for growth in stages, and partnering with global experts for cross-border hiring are ways to reduce the pressure while maintaining momentum. These strategies aren’t about cutting corners; they’re about being deliberate with time and resources.
But let’s be clear, cultural change is just as important as operational improvements.
Many businesses still treat HR as a transactional function, yet research shows that employee engagement and retention hinge on how people feel about their workplace. Gallup found that over half of employees believe their companies have lost the human touch, and that impacts productivity, loyalty, and morale. The businesses thriving today are the ones that recognise HR as a critical driver of organisational health, not just an administrative necessity.
Finally, businesses need to stop normalising overstretching as a solution. It might feel like short-term gains are being made, but the reality is that constant overstretching leads to burnout, costly errors, and missed opportunities. Lean HR teams need support, whether that’s in the form of tools, additional hires, or strategic partnerships that lighten the load.
The solution isn’t about piling on more responsibilities and hoping for the best. It’s about focusing on the things that truly make a difference. That means streamlining processes where possible, investing in tools that empower teams, and building a culture that recognises and values the pivotal role HR plays. When HR has the capacity to think and plan strategically, the entire business benefits.
We can’t keep expecting more without giving HR the resources to succeed. It’s time to break the cycle, make smarter investments towards streamlining operations, and create an environment where people teams, and the people they support, can truly thrive.
