The Institute of Directors (IOD) is urging small firms to place more emphasis on human resources to help them develop more successful businesses.
The IOD believes HR is now crucial to the success of any organisation and that directors must be more aware of things such as employment legislation.
John Weston, director of training and development at the IOD, said HR can offer a competitive advantage and employers should be utilising this to get the best from its people.
"Having the right people in the right place with the right skills to meet corporate goals is essential. Knowing how to find and keep them while navigating a competitive environment can make the difference between success and failure," he said.
The group will be holding a conference this month to update small and medium employers on employment law changes being introduced later this year.