Italian SMEs and the Great HR Misconception

99.9% of Italian businesses are SMEs.
Micro, small, and medium-sized enterprises that support the country’s economy, often through hard work, vision, and a remarkable ability to adapt.

Yet, even here, HR is still too often a non-issue.
Or worse: a postponed issue.

In most SMEs, there is no structured HR function, whereas from 15 employees onwards, it is simply unsustainable not to have one.
Not because a manual says so.
But because organizational complexity explodes, even if there are “only fifteen” people.

People management is therefore entrusted to administrative figures, the external payroll firm, or directly to the owner.

Who is often an excellent entrepreneur.
But it is not their job to do HR.

The result is almost always the same:

– no data on people
– no organizational insight
– no development strategy
– recruiting based on gut feelings, urgency, and “it seems right”

This is not entrepreneurial folklore.
It is an absence of structure.

And this is where situations begin that I have seen too many times to dismiss as isolated cases.

CEOs and owners who personally write job advertisements, post them “just about everywhere,” and then schedule one-on-one interviews on Skype.
Yes, Skype.
Interviews in sequence, without a grid, without criteria, without memory.

In the end, all that remains are scattered notes, often handwritten, based on the candidate’s photo or appearance:
“this one seems sharp,”
“this one doesn’t convince me,”
“this one maybe… but who was it?”

And then the phrase that always follows:
“Oh my god, I forgot who I wanted to call back.”

Not due to incompetence.
But because no one can do HR in their spare time.

Recruiting: The Invisible Cost

Improvised recruiting is one of the most underestimated costs in SMEs.
Because a wrong hire does not just impact the cost of recruitment.

It impacts:
– internal climate
– productivity
– wasted managerial time
– clients
– the company’s local reputation

The highest cost is not what you pay.
It is what you do not see until it is too late.

To remedy the situation, many companies rely on external headhunters.

And no, they are not all fluff.
But many are poorly chosen, briefed even worse, and left to work without context.

I have seen owners request searches for C-level figures, trust them completely, and fail to ask for references.
Three searches out of three: failure.
Three wrong hires.
Three invoices paid.

The problem was not the headhunter.
The problem was the absence of an HR function capable of governing the process.

Choosing, briefing, and evaluating a headhunter is HR’s job.
Not the job of an owner juggling a thousand priorities.

In many SMEs, the personnel budget is created ex post.
“Let’s see how many people we need as we go along.”
“We’ll figure it out at the end of the year.”

Thus, the budget does not guide decisions.
It justifies them after the fact.

Training follows the same logic.
There are funds, grants, and enormous opportunities.
But they are often unknown or unmanaged.

Result:
only mandatory training,
on obsolete platforms,
boring,
with no real impact on skills.

Bonus systems are decided “by feel.”
Just like hiring, because “why should I have the manager who will actually manage that person conduct the interview?”

There is no malice here.
There is a widespread belief of knowing better that simply does not hold up in practice.

Welfare becomes creative.
Sometimes too much so.

“I’ll have my cook come to the office so you’ll be happier.”
Too bad about insurance and liability.

Dismissals made on impulse, perhaps in the heat of the moment, perhaps via WhatsApp.
And then the surprise:
“But why am I paying so much?”
“But why did they sue me?”

Company regulations?
“No need. I’m here.”

Workplace injury?
“Better not to report it.”

Once again:
it is not malice.
It is an absence of HR.

There is a huge misconception:
that in small companies, the problems are small.

It is not true.

The needs of 15 people are the same as those of 400.
There are just fewer of them.
And for that very reason, every mistake carries more weight.

In startups, the script changes little.
Founders who hire based on trust, former colleagues, friends.
Unclear roles “because we are agile.”
Equity promises made verbally.
Performance reviews that do not exist.

Until it works.
Then comes growth, or the fund, or the market.
And the absence of structure suddenly becomes visible.

I have seen funds enter the capital and find themselves facing companies with no data, no processes, and no understanding of human capital.
Conflictual relationships from the start.
Result: the founder is quickly ousted.

The point is this:
HR is not needed when the company is on fire. It is needed before.

When you are small enough to be able to build.
Not when you have to remedy damage already done, perhaps even at the level of local employer branding.

The solution, in SMEs and startups, is not to immediately hire a full-time senior HR professional.
Often it is not sustainable.
And often it is not necessary.

A hybrid model works much better:
a fractional HR who comes in, puts the pieces together, structures what is missing, sets up systems and processes, introduces a data-driven approach, and trains an internal resource who then carries the work forward.

I do not come in to say what is wrong.
I come in so that, when I leave, the company does not go back to square one.

Serious support lasts from 12 to 24 months.
It is not one-off consulting.
It is the building of internal competence.

Because structured HR is not bureaucracy.
It is what allows an SME or a startup to stop wasting energy and start using it better.

And doing it when you are small is a huge advantage.

Doing it late, however, is damage control.
And damage control always costs more.
In terms of money, time, and energy.
Because first you have to repair what is broken, and only then can you rebuild.
When instead you could have built from the start.

And while you repair the damage, the company continues to move forward.
Only it does so poorly.