“Saving” on Human Resources often translates into hidden and unexpected losses due to turnover, absenteeism, and decreased proactivity.

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Madrid, October 9, 2025.

Spain is a country of SMEs. More than 99% of the Spanish business fabric is made up of small and medium-sized enterprises in which “many HR functions are still being consolidated,” says Emmanuel Djengue, CEO of Kaatch.co, the leading platform specialized in HR as a Service.

Although there are no official figures, it is estimated that nearly a quarter of Spanish SMEs lack a human resources department, and in many companies with more than 50 employees, there is only one person handling all HR-related duties. “We see it every day,” says Djengue, “and it’s striking, because this department is key to the organizational optimization of any company, regardless of size, and therefore to its financial well-being.”

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How Much Does ‘Saving’ on Human Resources Really Cost?

Recruitment and hiring, payroll and benefits administration, employee training and development, performance and workplace climate management, labor relations and legal compliance, and strategic talent planning are today the main responsibilities of HR professionals.

“Failing in any of these areas can lead to losses that are either overlooked or initially seem manageable but ultimately harm productivity and the reputation of companies that decide to save on human resources,” explains Djengue.

“It’s true that there is no single official metric for HR ROI, but we can translate into figures what this department contributes, contradicting the supposed ‘savings’ some companies pursue by removing HR from their structure,” says the Kaatch.co CEO.

“If we take the latest data from Spain’s National Statistics Institute (INE) on the average monthly labor cost per worker (€3,258.14, equivalent to about €25.63 per effective working hour) we can determine that one unproductive day, meaning a sick day or absence, costs a company around €205.”

This cost, he explains, “can be minimized with an HR function thanks to prevention efforts, administrative management, and structured reintegration processes handled by these professionals.”

Talent recruitment and acquisition is another Achilles heel for SMEs that prefer to “save” on HR. According to the INE, Spain ended 2024 with 148,018 job vacancies unfilled, “a figure that prolongs recruitment processes, especially for technical profiles, and highlights the importance of professionals specialized in this function,” reflects Djengue.

When an SME lacks HR, “it loses appeal, speed, and precision in recruitment,” the Kaatch.co CEO explains, “because the profiles sought are poorly defined, processes drag on due to a lack of structure and accountability, interviews are unstructured and turn into improvised chats without behavioral questions or shared evaluation criteria, there’s no employer branding, and the company’s value proposition is vague.

This directly affects the level of interest from qualified candidates, and the offer ultimately appears uncompetitive and opaque in the eyes of the market.”

Furthermore, when there is no HR department, internal conflicts tend to fester, and misunderstandings, friction, or poorly managed dismissals “can have a damaging effect in small companies, where each absence or dispute can paralyze part of daily operations,” warns the Kaatch.co CEO.

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Basic People Management Policies

Avoiding these extra costs caused by poor HR management doesn’t require a full department, “just the implementation of basic, coherent people management policies,” says Djengue.

“A minimum HR toolkit, even with external support or specialized consultants, reduces turnover, improves productivity, and protects you from potential labor sanctions.”

Some companies cannot afford to build a full HR department and instead opt to establish “a minimum viable system,” explains the Kaatch.co CEO, “with clear, essential components that address 80% of their challenges.”

In general, SMEs “need basic procedures, metrics, and a responsible person, even part-time, who can establish corporate culture and understand that every day without a plan costs money.”