Top HR risks SMEs often overlook (and why they matter)

Published 3 Jun 2025 | 2 min read

In the hustle of running a small or medium-sized business, HR can easily slide down the priority list. But here's the reality: many of the biggest risks SMEs face are hiding in their HR practices, or lack thereof. 

From my experience working with business owners across New Zealand, these are the top HR risks that are too often overlooked, and why they deserve your attention.

1. Vague or Outdated Employment Agreements

Still using an old template or verbal agreement? You're not alone, but you're exposed. Clear, legally compliant contracts are essential when it comes to performance, pay, terminations, and disputes.

2. No Real Performance Management

Avoiding difficult conversations or failing to document underperformance might feel easier in the short term but it’s a ticking time bomb. Without structure, it becomes hard to justify decisions if things go wrong.

3. Overlooking Legal Compliance

NZ employment law is detailed and fast-changing. Even well-meaning employers fall foul of the Holidays Act, record-keeping rules, or fair pay legislation. Non-compliance can be costly and ignorance won’t protect you.

4. Mishandled Workplace Issues

Whether it’s a bullying complaint or suspected misconduct, how you respond matters. A poorly managed investigation or none at all can lead to personal grievance claims and loss of trust.

5. Weak Onboarding

Too often, new hires are left to "figure it out." A structured induction builds engagement, reduces early turnover, and helps new employees hit the ground running.

6. No Succession Planning

Relying on one key person without a backup plan? That’s high risk. Planning for continuity isn’t just for corporates SMEs can be hit even harder when someone critical walks out the door.

7. Missing or Inconsistent HR Policies

From leave to remote work to conflict resolution having no documented process leads to inconsistency, confusion, and disputes. Well-written policies set the tone and protect everyone.

Final thought

These aren’t just compliance issues they’re business continuity risks. Strong HR practices don’t need to be complicated, but they do need to be intentional.

If you’re not sure where to start or want to review your current gaps, let’s talk. EQ Consultants and HR Today support SMEs across New Zealand with practical, fit-for-purpose HR advice.

More information on our HR Consulting services.