Your "Just good enough" HR Team is optimising the wrong problem.

Nov 20, 2025
5 min read

Summary : Your HR processes admin brilliantly but miss systemic dysfunction bleeding value. Fractional thinkers diagnose structural failures (misaligned rewards to decision bottlenecks) before crises emerge.

There’s been a quiet resignation happening in SME boardrooms over the last few years. Not the hyperbolic TikTok kind. The kind where CEOs have quietly accepted that their HR is just…limiting and administrative.

The scaling Tech Bros have realised that converting that young recruiter into a value-adding CPO takes time they don’t have. Or the established SME has gone for the “middle of the road, all we can afford” HR manager who keeps busy by over indexing on happiness and engagement, turning the Executive team meet into a discussion about potholes in the car park or another pointless disjointed wellbeing initiative.

Collusion kicks in. Mediocrity gets ignored. A necessary cost centre. People drowning in compliance forms, annual leave trackers, and employment contracts that need updating because the government changed something again.

They’re not bad people. They’re pretty good at what they do. The probation reviews get scheduled and done. The right-to-work checks do happen. The employee handbook gets its annual refresh. Everything ticks over. Just about.

And that’s precisely the problem.

Because while your HR team is optimising form completion, your business is haemorrhaging money through invisible system failures they’re not equipped to see, let alone fix. And that’s before we talk about the seismic opportunity that is AI on our organisational fabric.

The Real Cost of Administrative HR

Your Sales Director keeps missing targets. HR’s response? Update the performance improvement plan template, schedule the quarterly review, document everything properly for potential tribunal protection. Big stick economics and the illusion of movement.

But here’s what they’re not asking: Why does your commission structure reward individual deal-hoarding when your business model requires collaborative account management? Why does your sales process require sign-off from three people who don’t understand the customer context? Why are your top performers leaving for competitors offering 10% less money but 90% less bureaucratic friction?

These aren’t people problems. They’re system problems with expensive secondary effects.

Your “just good enough” HR team sees resistance to the new CRM system. A systems thinker sees misaligned incentives, unclear decision rights, and a formal hierarchy that contradicts your actual value-creation network.

Your compliant HR team processes the fifth resignation this quarter and posts another job ad. A systems thinker asks why your promotion criteria reward tenure over performance, why your middle management layer adds cost without adding value, and why talented people keep choosing organisations that let them make decisions.

The Form-Filling Trap

Here’s the uncomfortable truth: Your HR team isn’t choosing to be administrative. They’re responding perfectly rationally to the system you’ve built around them.

You’ve hired people who can “handle the admin.” You’ve given them a budget for CIPD membership and the occasional trip to a conference to look at workplace trends you’ll never embrace.

You’ve set expectations around tribunal risk, compliance monitoring, and policy documentation. You’ve measured them on process completion, not business impact. You spend your time helping them by sending reminders, rather than reflecting on the issue of people opting out.

And they deliver exactly what you ask for. A compliant, risk-averse, administratively competent function that works beautifully IN your flawed system while the organisation itself slowly strangles your growth.

This is Deming’s nightmare playing out in real-time: 94% of your problems are system-driven, but you keep investing in solutions that assume the problem is people-driven.

What Systems Thinking Actually Looks Like

Real HR capability—the kind that creates competitive advantage rather than administrative comfort—starts with completely different questions:

Not “How do we get engagement scores from 4.2 to 4.4?” but “Why are we measuring engagement when our actual problem is that high performers can’t make decisions without three layers of approval?”
Not “How do we reduce turnover?” but “What structural obstacles make talented people choose to leave rather than stay and create value?”
Not “How do we implement this new performance framework?” but “Why are we copying a framework designed for a 5,000-person business when we’re 50 people with completely different complexity?”
Not “How do we get people to embrace change?” but “What incentive structures, power dynamics, and decision rights are making intelligent people rationally resist what we’re asking them to do?”

This isn’t HR work. This is strategic diagnosis, requiring curiosity about root causes, comfort with structural analysis, and the capability to make explicit trade-offs about power, status, and consequences.

Standing upright in the boardroom and challenging the collusion is also recommended but not typically for the full-time and therefore politically motivated.

Your small HR team processing right-to-work checks isn’t equipped for this. Not because they’re incompetent, but because they’re operating at the wrong altitude entirely.

The Fractional Solution

Here’s what smart SME CEOs are figuring out: You don’t need three people doing admin. You need one brilliant systems thinker working ON your organization for two days a week, plus whatever administrative support keeps the compliance lights on.

Someone who can walk into your business, identify the structural obstacles creating those expensive secondary effects, and redesign the systems before the symptoms become crises.

Someone who asks uncomfortable questions about why your last three “AI transformation initiatives” failed, why your leadership team meeting always runs two hours over, and why everyone knows the values on the wall contradict the behaviours that get rewarded.

Someone who understands that organisational design always trumps technology deployment, that culture is downstream of structure, and that most “people problems” are actually system problems in disguise.

This person exists. They’re just not the person currently updating your employee handbook.

The Bottom Line

Your “just good enough” HR team is optimising form completion while your business leaks value through system failures nobody’s diagnosing.

You can keep investing in administrative competence and watching those invisible costs compound. Or you can bring in fractional strategic capability that works ON the system rather than IN it.

The secondary effects of your current approach are already accumulating. You’re just not measuring them yet.

Choose accordingly. Choose properly. Choose Fractional.

What next?

Want to understand how your current culture stands up to scrutiny with a free 8-minute cultural readiness self-assessment. Access it here and find out.

If I might be able to support your SME build out the right cultural infrastructure. Book a free consultation here.

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About the author.

Barry Flack is an award-winning HR practitioner, who wants to use this platform to ensure that as many SMEs as possible know how to make great workplaces!

Learn more about Barry’s services by visiting his website.